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CHAPTER 514
514.01 Mechanics, Laborers and Material Suppliers
514.011 Notice
514.02 Nonpayment for Improvement; Penalty
514.03 Extent and Amount of Lien
514.04 Lines of Railway, Telegraph, or Similar Projects
514.05 When Lien Attaches; Notice
514.06 Title of Vendor or Consenting Owner, Subject To
514.07 Payments Withheld; Lien Waivers
514.08 Statement; Notice; Necessity for Recording; Contents
514.09 Two or More Buildings
514.10 Foreclosure of Liens
514.11 Commencement of Action; Proceedings
514.12 Notice of Lis Pendens
514.13 Statutory Lienholder Rights; Nonexclusive
514.135 Computation of Interest on Claims
514.14 Postponement, Judgment, Subrogation
514.15 Judgment, Sale, Redemption
514.16 Severance of Building, Resale, Receiver
MINNESOTA STATUTES 1996
CHAPTER 514
514.01 Mechanics, Laborers and Material Suppliers
Whoever performs engineering or land surveying services with
respect to real estate, or contributes to the improvement
of real estate by performing labor, or furnishing skill, material
or machinery for any of the purposes hereinafter stated, whether
under contract with the owner of such real estate or at the
instance of any agent, trustee, contractor or subcontractor
of such owner, shall have a lien upon the improvement, and
upon the land on which it is situated or to which it may be
removed, that is to say, for the erection, alteration, repair,
or removal of any building, fixture, bridge, wharf, fence,
or other structure thereon, or for grading, filling in, or
excavating the same, or for clearing, grubbing, or first breaking,
or for furnishing and placing soil or sod, or for furnishing
and planting of trees, shrubs, or plant materials, or for
labor performed in placing soil or sod, or for labor performed
in planting trees, shrubs, or plant materials, or for digging
or repairing any ditch, drain, well, fountain, cistern, reservoir,
or vault thereon, or for laying, altering or repairing any
sidewalk, curb, gutter, paving, sewer, pipe, or conduit in
or upon the same, or in or upon the adjoining half of any
highway, street, or alley upon which the same abuts.
514.011 Notice
Subdivision 1. Contractors. Every person who enters into a
contract with the owner for the improvement of real property
and who has contracted or will contract with any subcontractors
or material suppliers to provide labor, skill or materials
for the improvement shall include in any written contract
with the owner the notice required in this subdivision and
shall provide the owner with a copy of the written contract.
If no written contract for the improvement is entered into,
the notice must be prepared separately and delivered personally
or by certified mail to the owner or the owner’s authorized
agent within ten days after the work of improvement is agreed
upon. The notice, whether included in a written contract or
separately given, must be in at least 10-point bold type,
if printed, or in capital letters, if typewritten and must
state as follows:
“(a) Any person or company supplying labor or materials
for this improvement to your property may file a lien against
your property if that person or company is not paid for the
contributions.
(b) Under Minnesota law, you have the right to pay persons
who supplied labor or materials for this improvement directly
and deduct this amount from our contract price, or withhold
the amounts due them from us until 120 days after completion
of the improvement unless we give you a lien waiver signed
by persons who supplied any labor or material for the improvement
and who gave you timely notice.”
A person who fails to provide the notice shall not have the
lien and remedy provided by this chapter. The notice required
by this subdivision is not required of any person who is an
owner of the improved real estate, to any corporate contractor
of which the owner of the improved real estate is an officer
or controlling shareholder, to any contractor who is an officer
or controlling shareholder of a corporation which is the owner
of the improved real estate, or to any corporate contractor
managed or controlled by substantially the same persons who
manage or control a corporation which is the owner of the
improved real estate.
Subd. 2. Subcontractor to give notice. (a) Every person who
contributes to the improvement of real property so as to be
entitled to a lien pursuant to section 514.01, except a party
under direct contract with the owner must, as a necessary
prerequisite to the validity of any claim or lien, cause to
be given to the owner or the owner’s authorized agent,
either by personal delivery or by certified mail, not later
than 45 days after the lien claimant has first furnished labor,
skill or materials for the improvement, a written notice in
at least 10-point bold type, if printed, or in capital letters,
if typewritten, which shall state:
“This notice is to advise you of your rights under Minnesota
law in connection with the improvement to your property. Any
person or company supplying labor or materials for this improvement
may file a lien against your property if that person or company
is not paid for the contributions.
We ____________________________(name and address of subcontractor)
have been hired by your contractor
________________________(name of your contractor) to provide
______________ or ______________ for type of service) (material)
this improvement. To the best of our knowledge, we estimate
our charges will be ______________________ . (value of service
or material) If we are not paid by your contractor, we can
file a claim against your property for the price of our services.
You have the right to pay us directly and deduct this amount
from the contract price, or withhold the amount due us from
your contractor until 120 days after completion of the improvement
unless your contractor gives you a lien waiver signed by me
(us). We may not file a lien if you paid your contractor in
full before receiving this notice.”
(b) A person entitled to a lien does not lose the right to
the lien for failure to strictly comply with this subdivision
if a good faith effort is made to comply, unless the owner
or another lien claimant proves damage as a direct result
of the failure to comply.
Subd. 3. Material suppliers, may request information. A contractor
who contracts with any subcontractors or material suppliers
to provide labor, skill or materials for the improvement shall
upon request provide the subcontractor or material supplier
with the name and address of the owner within 10 days of the
initial request. Any contractor who fails to supply the information
requested pursuant to this subdivision, is liable for any
actual damages sustained or expenses incurred by the subcontractor
or material supplier because of the contractor’s failure
to provide the information, plus reasonable attorney fees
and costs.
Subd. 4. Repealed, 1981 c 213 s 4
Subd. 4a. Exceptions; same ownership. The notice required
by this section shall not be required to be given where the
contractor is managed or controlled by substantially the same
persons who manage or control the owner of the improved real
estate.
Subd. 4b. Exceptions; multiple dwelling. The notice required
by this section shall not be required to be given in connection
with an improvement to real property consisting of or providing
more than four family units when the improvement is wholly
residential in character. Subd. 4c. Exceptions; nonagricultural
and nonresidential real estate. The notice required by this
section shall not be required to be given in connection with
an improvement to real property which is not in agricultural
use and which is wholly or partially nonresidential in use
if the work or improvement:
(a) is to provide or add more than 5,000 total usable square
feet of floor space; or
(b) is an improvement to real property where the existing
property contains more than 5,000 total usable square feet
of floor space; or
(c) is an improvement to real property which contains more
than 5,000 square feet and does not involve the construction
of a new building or an addition to or the improvement of
an existing building. For the purposes of this subdivision,
“agricultural use” shall have the meaning given
to it in section 473H.02, subdivision 3. For the purposes
of clause (c), improvements include, but are not limited to,
clearing, excavating, grading, filling in, landscaping, well
digging, drilling or repairing, paving, surfacing or striping
parking lots, digging or repairing a ditch, drain, or reservoir.
Subd. 5. Owner defined. For the purposes of this section,
“owner” means the owner of any legal or equitable
interest in real property whose interest in the property (1)
is known to one who contributes to the improvement of the
real property, or (2) has been recorded or filed for record
if registered land, and who enters into a contract for the
improvement of the real property.
Subd. 6. Repealed, 1989 c 160 s 4
514.02
Nonpayment for Improvement; Penalty
Subdivision
1. Acts constituting. If a person, on any improvement to real
estate within the meaning of section 514.01, fails to use
the proceeds of any payment made to that person on account
of such improvement by the owner of such real estate or person
having any improvement made, for the payment for labor, skill,
material, and machinery contributed to such improvement, knowing
that the cost of any such labor performed, or skill, material,
or machinery furnished for such improvement remains unpaid,
and who has not furnished to the person making such payment
either a valid lien waiver as to any unpaid labor performed,
or skill, material, or machinery furnished for such improvement,
or a payment bond in the basic amount of the contract price
for such improvement, conditioned for the prompt payment to
any person or persons entitled thereto for the performance
of labor or the furnishing of skill, material, or machinery
for the improvement, shall be guilty of theft of the proceeds
of such payment and upon conviction shall be fined not more
than $3,000 or imprisoned not more than one year, or both.
Subd. 2. Notice of nonpayment. Notice of nonpayment of the
cost of labor, skill, material, and machinery contributing
to the improvement of the real estate to the person paid for
such improvement may be given by the person who made payment
for such improvement, or by any person furnishing the labor,
skill, material, or machinery contributing to the improvement
and who has not been paid for the contribution. Notice may
be given in any reasonable manner. Notice shall be in writing
and in any terms that identify the real estate improved and
the nonpayment complained of.
Subd. 3. Proof of knowledge of nonpayment. Proof that such
person failed to pay for labor performed, or skill, material,
or machinery furnished within 15 days after receiving notice
that the cost of such labor performed, or skill, material,
or machinery furnished remains unpaid will be sufficient to
sustain a finding that the proceeds of such payment were used
for a purpose other than the payment for labor, skill, material,
and machinery for such improvement, knowing that the costs
of labor performed, or skill, material, or machinery furnished
remains unpaid, unless the person;
(1) Establishes that all proceeds received from the person
making such payment have been applied to the cost of labor,
skill, material, or machinery furnished for the improvement;
or
(2) Within 15 days after receiving notice shall give a bond
or make a deposit with the court administrator of district
court, in an amount and form approved by a judge of district
court, to hold harmless the owner or person having the improvement
made from any claim for payment of anyone furnishing labor,
skill, material, or machinery for such improvement.
514.03
Extent and Amount of Lien
Subdivision 1. Notice not required. With respect to any contract
or improvement as to which notice is not required by section
514.011, the lien shall be as follows:
(a) If the contribution is made under a contract with the
owner and for an agreed price, the lien as against the owner
shall be for the sum agreed upon.
(b) In all other cases, it shall be for the reasonable value
of the work done, and of the skill, material, and machinery
furnished.
Subd. 2. Notice required. With respect to any contract or
improvement as to which notice is required by section 514.011,
the lien shall be as follows:
(a) If the contribution is made under a contract with the
owner and for an agreed price, the lien as against the owner
shall be for the sum agreed upon;
(b) In all other cases, it shall be for the reasonable value
of the work done, and of the skill, material, and machinery
furnished. Provided, however:
(c) The total sum of all liens, whether the contribution is
made under a contract with the owner or otherwise, shall not
exceed the total of said contract price plus the contract
price or reasonable value of any additional contract or contracts
between the owner and the contractor or additional work ordered
by the owner, less the total of the following:
(i) Payments made by the owner or the owner’s agent
to the contractor prior to receiving any notice prescribed
by section 514.011, subdivision 2;
(ii) Payments made by the owner or the owner’s agent
to discharge any lien claims as authorized by section 514.07;
and
(iii) Payments made by the owner or the owner’s agent
pursuant to presentation of valid lien waivers from persons
or companies contributing to the improvement who have previously
given the notice required by section 514.011, subdivision
2.
Subd. 3. All title, interest. The lien shall extend to all
the interest and title of the owner in and to the premises
improved, not exceeding 80 acres, except in the case of homesteaded
agricultural land as used in section 273.13, subdivision 23,
where the lien shall be limited to 40 acres.
514.04 Lines of Railway, Telegraph, or Similar
Projects
If such contribution be thus made for the construction, alteration,
or repair of any line of railway, or any structure or appurtenance
of such railway, or of any telegraph, telephone, or electric
light line, or of any line of pipe, conduit, or subway, or
any appliance or fixture pertaining to either, the person
performing such labor, or furnishing such skill, material,
or machinery, shall have a like lien upon the lines so improved,
and upon all the rights, franchises, and privileges of the
owner appertaining thereto.
514.05
When Lien Attaches; Notice
Subdivision 1. Generally. All liens, as against the owner
of the land, shall attach and take effect from the time the
first item of material or labor is furnished upon the premises
for the beginning of the improvement, and shall be preferred
to any mortgage or other encumbrance not then of record, unless
the lienholder had actual notice thereof. As against a bona
fide purchaser, mortgagee, or encumbrancer without actual
or record notice, no lien shall attach prior to the actual
and visible beginning of the improvement on the ground, but
a person having a contract for the furnishing of labor, skill,
material, or machinery for the improvement, may file for record
with the county recorder of the county within which the premises
are situated, or, if claimed under section 514.04, with the
secretary of state, a brief statement of the nature of the
contract, which statement shall be notice of that person’s
lien only.
Subd. 2. Exception. Visible staking, engineering, land surveying,
and soil testing services do not constitute the actual and
visible beginning of the improvement on the ground referred
to in this section. This subdivision does not affect the validity
of the liens of a person or the notice provision provided
in this chapter and affects only the determination of when
the actual and visible beginning of the improvement on the
ground, as the term is used in subdivision 1, has commenced.
514.06 Title of Vendor or Consenting Owner,
Subject To
When land is sold under an executory contract requiring the
vendee to improve the same, and such contract is forfeited
or surrendered after liens have attached by reason of such
improvements, the title of the vendor shall be subject thereto;
but the vendor shall not be personally liable if the contract
was made in good faith. When improvements are made by one
person upon the land of another, all persons interested therein
otherwise than as bona fide prior encumbrancers or lienors
shall be deemed to have authorized such improvements, in so
far as to subject their interests to liens therefore. Any
person who has not authorized the same may protect that person’s
interest from such liens by serving upon the persons doing
work or otherwise contributing to such improvement within
five days after knowledge thereof, written notice that the
improvement is not being made at that person’s instance,
or by posting like notice, and keeping the same posted, in
a conspicuous place on the premises. As against a lessor no
lien is given for repairs made by or at the instance of the
lessee.
514.07
Payments Withheld; Lien Waivers
The owner may withhold from the owner’s contractor as
much of the contract price as may be necessary to meet the
demands of all persons, other than the contractor, having
a lien upon the premises for labor, skill, or material furnished
for the improvement, and for which the contractor is liable.
The owner may pay and discharge all these liens and deduct
the cost of them from the contract price. No owner shall be
required to pay the owner’s contractor until the expiration
of 120 days from the completion of the improvement, except
to the extent that the contractor furnishes to the owner waivers
of claims for mechanics’ liens signed by persons who
furnished labor, skill or material for the improvement and
who have given the notice required by section 514.011, subdivision
2. The owner, within 15 days after the completion of the contract,
may require any person having a lien hereunder, by written
request therefore, to furnish to the owner an itemized and
verified account of the person’s lien claim, the amount
of it, and the person’s name and address. No action
or other proceeding may be commenced for the enforcement of
the lien until ten days after the statement is furnished.
The word “owner,” as used in this section, includes
any person interested in the premises other than as a lienor.
514.08 Statement; Notice; Necessity for Recording; Contents
Subdivision 1. Notice required. The lien ceases at the end
of 120 days after doing the last of the work, or furnishing
the last item of skill, material, or machinery, unless within
this period:
(1) a statement of the claim is filed for record with the
county recorder or, if registered land, with the registrar
of titles of the county in which the improved premises are
situated, or, if the claim is made under section 514.04, with
the secretary of state; and
(2) a copy of the statement is served personally or by certified
mail on the owner or the owner’s authorized agent or
the person who entered into the contract with the contractor.
Subd. 2. Statement by lien claimant; requirements. Such statement
shall be made by or at the instance of the lien claimant,
be verified by the oath of some person shown by such verification
to have knowledge of the facts stated, and shall set forth:
(1) a notice of intention to claim and hold a lien, and the
amount thereof;
(2) that such amount is due and owing to the claimant for
labor performed, or for skill, material, or machinery furnished,
and for what improvement the same was done or supplied;
(3) the names of the claimant, and of the person for or to
whom performed or furnished;
(4) the dates when the first and last items of the claimant’s
contribution to the improvement were made;
(5) a description of the premises to be charged, identifying
the same with reasonable certainty;
(6) the name of the owner thereof at the time of making such
statement, according to the best information then had;
(7) the post office address of the claimant. (The failure
to insert such post office address shall not invalidate the
lien statement);
(8) that claimant acknowledges that a copy of the statement
must be served personally or by certified mail within the
120-day period provided in this section on the owner, the
owner’s authorized agent or the person who entered into
the contract with the contractor as provided herein; and
(9) that notice as required by section 514.011, subdivision
2, if any, was given.
514.09 Two or More Buildings
A lienholder who has contributed to the erection, alteration,
removal, or repair of two or more buildings or other improvements
situated upon or removed to one lot, or upon or to adjoining
lots, under or pursuant to the purposes of one general contract
with the owner, may file one statement for the entire claim,
embracing the whole area so improved; or, if so electing,
the lienholder may apportion the demand between the several
improvements, and assert a lien for a proportionate part upon
each, and upon the ground appurtenant to each, respectively.
514.10
Foreclosure of Liens
Such liens may be enforced by action in the district court
of the county in which the improved premises or some part
thereof are situated, or, if claimed under section 514.04,
of any county through or into which the railway or other line
extends, which action shall be begun and conducted in the
same manner as actions for the foreclosure of mortgages upon
real estate, except as herein otherwise provided, but the
owner or any person or party having an interest in or lien
upon the property against which a lien has been filed under
the provisions of this chapter may bring an action to remove
the lien in the nature of an action to determine adverse claims
and subject to all the provisions of law regarding actions
to determine adverse claims.
When an action has been brought, either by the lien claimant
to enforce the lien or by the owner, person or party having
an interest in or a lien upon the property against which a
lien claim has been filed to determine adverse claims, as
provided herein, application may be made at any time after
such action has been commenced by any of the persons or parties
above mentioned to have the property affected by any such
lien, released from the lien by giving ten days’ notice,
or such other and shorter notice as the court may order and
direct, to the lien claimant, or the lien claimant’s
attorney, of intention to apply to the district court for
the release of such lien and of the time and place of hearing.
Upon a hearing upon an application the court shall fix a sum
of money to be deposited by the applicant with the court administrator
of the district court, which sum shall not be less than the
aggregate amount of, (1) the amount claimed in the lien statement,
(2) $18 for every $100 or fraction thereof, to cover interest,
(3) the probable disbursements in an action to enforce the
claim for which the lien statement was filed, (4) an amount
not less than double the amount of attorneys’ fees allowed
upon the foreclosure under section 582.01, to cover any allowance
the court may make upon the trial for costs and attorneys’
fees in the action or upon appeal. Upon making a deposit in
the amount so fixed in the order of court, an order shall
be made by the court releasing the premises described in the
statement thereof from the effect of such lien. The lien claimant
shall have the same right of lien against such money deposit
as against the property released. The order releasing the
lien may be filed in the office of the county recorder or
registrar of titles, if registered land, of the county in
which the lien statement is recorded or filed, and thereupon
the premises affected shall be released therefrom. The court
shall by the same order discharge any notice of lis pendens
filed in any action in which such lien may be asserted if
it appears that all mechanics’ liens filed or recorded
against the property covered by the lis pendens have been
released.
After the release of the property affected, the judgment ordered
in any action either to enforce such lien or determine adverse
claims and remove such lien, in the event that the lien is
established, shall provide that it be paid, and it shall be
paid without further proceedings out of the deposit made as
provided herein. The judgment of the district court establishing
a lien, unless a written notice of intention to appeal therefrom
is served on the court administrator of the district court
within 30 days from the entry of such judgment, shall be authority
to such court administrator to pay the amount specified in
such judgment to the persons entitled thereto, or their attorney
of record in the action. The balance of deposits, if any,
shall be returned to the depositor. If the lien was not a
valid and enforceable one, the judgment shall direct the return
of the whole deposit to the depositor unless the claimant
obtains judgment against such depositor personally and in
such case the judgment shall be paid as hereinbefore specified.
514.11
Commencement of Action; Proceedings
The action may be commenced by any lienholder who has filed
a lien statement for record and served a copy thereof on the
owner pursuant to section 514.08, and all other such lienholders
shall be made defendants therein. The summons shall state
that the complaint has been filed with the court administrator
and shall be of no effect unless such complaint be in fact
so filed. It shall contain a notice that the action is brought
to foreclose a lien, giving the amount thereof, and a brief
description of the premises affected, and of the improvement
out of which the lien arose, and shall require each defendant
to file an answer to the complaint with the court administrator
within 20 days after service on the defendant. Such answer,
in addition to all other matters proper to be pleaded, shall
set up any lien claimed by the defendant, and demand the enforcement
thereof. No copies of such complaint or answer need be served
on any party, upon demand or otherwise, and all averments
of the answer shall be taken as denied without further pleading.
514.12
Notice of Lis Pendens
Subdivision 1. Recording. At the beginning of the action the
plaintiff shall file for record with the county recorder or,
if registered land, with the registrar of titles of the county
in which it is brought, and of the several counties if the
lien be claimed under section 514.04, a notice of the pendency
thereof, embracing therein a copy of the summons, omitting
the caption.
Subd. 2. One action for all. After such filing, no other action
shall be commenced for the enforcement of any lien arising
from the improvement described, but all such lienholders shall
intervene in the original action by answer, as provided in
section 514.11. Any such lienholder not named as a defendant
may answer the complaint and be admitted as a party. If more
than one action shall be commenced in good faith, all shall
be consolidated and tried as one, under such order of the
court as may best protect the rights of all parties concerned.
Subd. 3. One-year limitation. No lien shall be enforced in
any case unless the holder thereof shall assert the same,
either by filing a complaint or answer with the court administrator,
within one year after the date of the last item of the claim
as set forth in the recorded lien statement; and, no person
shall be bound by any judgment in such action unless made
a party thereto within the year; and, as to a bona fide purchaser,
mortgagee, or encumbrancer without notice, the absence from
the record of a notice of lis pendens of an action after the
expiration of the year in which the lien could be so asserted
shall be conclusive evidence that the lien may no longer be
enforced and, in the case of registered land, the registrar
of titles shall refrain from carrying forward to new certificates
of title the memorials of lien statements when no such notice
of lis pendens has been registered within the period.
514.13 Statutory Lienholder Rights; Nonexclusive
The rights granted by this chapter are nonexclusive. No failure
to comply with any of the provisions of this chapter shall
affect the right of any person to recover, in an ordinary
civil action, from the party with whom a contract was made.
514.135 Computation of Interest on Claims
Except as otherwise provided by contract, interest awarded
on mechanics’ lien claims shall be calculated at the
legal rate, as provided in section 334.01, from the time the
underlying obligation arises until the expiration of 30 days
after the claimant’s last item of labor, skill, or materials
was furnished to the improvement and shall be calculated thereafter
at the rate computed for verdicts and judgments, as provided
in section 549.09.
514.14
Postponement, Judgment, Subrogation
If upon the trial of such action, or at any time before the
execution of final judgment therein, it shall transpire that
any proper party who may still be brought in has been omitted,
or that any party then entitled to answer has not yet appeared,
or that for any other reason the trial or judgment should
be delayed, or the judgment as ordered or entered be modified,
the court may postpone the trial, or make such other or further
order in the premises as shall be just. If it be found that
any indebtedness for which a lien is demanded be not then
due, the same shall be allowed for the amount of its present
worth. Judgment shall be given in favor of each lienholder
for the amount demanded and proved, with costs and disbursements
to be fixed by the court at the trial, and such amount shall
not be included in the lien of any other party; but if, after
judgment, a lienholder who is personally indebted for the
amount of any lien so adjudged in favor of another shall pay
such indebtedness, the lienholder shall thereby become subrogated
to the rights of the person so paid.
514.15 Judgment, Sale, Redemption
The judgment shall direct a sale of the real estate or other
property for the satisfaction of all liens charged thereon,
and the manner of such sale, subject to the rights of all
persons which are paramount to such liens or any of them.
It shall require the officer making such sale to pay over
and distribute the proceeds of the sale, after deducting all
lawful charges and expenses, to and among the lienors to the
amount of their respective claims, if there is sufficient
therefore; and if there is not sufficient then to divide and
distribute the same among the several lienors in proportion
to the amount due to each, and without priority among themselves.
If the estate sold be a leasehold having not more than two
years to run, or be the interest of a vendee under an executory
contract of sale the conditions whereof are to be performed
within the same period, no redemption shall be allowed; in
all other cases the right of redemption shall be the same
as upon execution sales. No sale shall be deemed complete
until reported to and confirmed by the court.
514.16 Severance of Building, Resale, Receiver
If, without material injury to the building or other improvement
to which the lienholder has contributed, the same can be severed
and removed from the land, the judgment, in the discretion
of the court, may direct the sale of such improvement, with
the privilege to the purchaser of removing the same at any
time within 60 days, unless before such removal the owner
or other person interested in the land shall pay to the sheriff,
for the purchaser, the amount realized from the sale, with
interest and all expenses incurred toward such removal. If
in any case the sale be not confirmed, the court may direct
a resale, or, if deemed best, may appoint a receiver to lease
or otherwise handle the property, under its direction, in
the interests of all persons concerned. And in all cases of
liens arising under section 514.04, such receivership may
be created in the first instance instead of directing a sale
of the property. |
