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TITLE 71 MORTGAGES, PLEDGES, AND LIENS
CHAPTER 3 LIENS
PART 5 CONSTRUCTION LIENS
71-3-504 Renumbered 71-3-561
71-3-505 Renumbered 71-3-562
71-3-506 through 71-3-510 reserved
71-3-511 Repealed
71-3-512 Renumbered 71-3-533
71-3-513 Renumbered 71-3-534
71-3-514 Repealed
71-3-515 Renumbered 71-3-537
71-3-516 Renumbered 71-3-551
71-3-517 Renumbered 71-3-552
71-3-518 Renumbered 71-3-553
71-3-519 Renumbered 71-3-563
71-3-520 reserved
71-3-521 Scope
71-3-522 Definitions
71-3-523 Who May Claim a Construction Lien - Limitation
71-3-524 Limitation of Lien for Materials Supplied
71-3-525 Extent of Lien
71-3-526 Amount of Lien
71-3-527 through 71-3-530 reserved
71-3-531 Notice of Right to Claim Lien Required - Exceptions
71-3-532 Content of Notice of Right to Claim Lien
71-3-533 Notice of Completion
71-3-534 Filing With County Clerk - Notification of Owner
71-3-535 Attachment of Lien - Filing
71-3-536 Content of Lien Notice
71-3-537 Acknowledgment of Satisfaction of Lien - Penalty
71-3-538 through 71-3-540 reserved
71-3-541 Priority Amount Holders of Construction Liens
71-3-542 Priority of Construction Liens as Against Claims
Other Than Construction Lien Claims
71-3-543 through 71-3-550 reserved
71-3-551 Substitution of Bond Allowed - Filing - Amount -
Condition
71-3-552 Lien Discharged Upon Filing of Bond
71-3-553 Action Upon Bond - Period of Limitation Same
71-3-554 through 71-3-560 reserved
71-3-561 Parties
71-3-562 Limitation on Actions
71-3-563 Rules of Practice
MONTANA STATUTES
TITLE 71 MORTGAGES, PLEDGES, AND LIENS
CHAPTER 3 LIENS
PART 5 CONSTRUCTION LIENS
71-3-504 Renumbered 71-3-561 by Code Commissioner, 1987.
71-3-505 Renumbered 71-3-562 by Code Commissioner, 1987.
71-3-506 through 71-3-510 reserved.
71-3-511 Repealed. Sec. 17, Ch. 202, L. 1987.
71-3-512 Renumbered 71-3-533 by Code Commissioner, 1987.
71-3-513 Renumbered 71-3-534 by Code Commissioner, 1987.
71-3-514 Repealed. Sec. 17, Ch. 202, L. 1987.
71-3-515 Renumbered 71-3-537 by Code Commissioner, 1987.
71-3-516 Renumbered 71-3-551 by Code Commissioner, 1987.
71-3-517 Renumbered 71-3-552 by Code Commissioner, 1987.
71-3-518 Renumbered 71-3-553 by Code Commissioner, 1987.
71-3-519 Renumbered 71-3-563 by Code Commissioner, 1987.
71-3-520 reserved.
71-3-521 Scope
This part creates and provides for the attachment and enforceability
of a construction lien against real estate in favor of a person
furnishing services or materials under a real estate improvement
contract. A nonconsensual lien against real estate for improvements
made thereon may not arise except as provided in this part.
71-3-522
Definitions
(1) “Commencement of work” means the date of the
first visible change in the physical condition of the real
estate caused by the first person furnishing services or materials
pursuant to a particular real estate improvement contract.
(2) “Construction lien” or “lien”
means a lien against real estate arising under this part.
(3) (a) “Contracting owner” means a person who
owns an interest in real estate and who, personally or through
an agent, enters into an express or implied contract for the
improvement of the real estate.
(b) For the purpose of determining whether a person is a contracting
owner, agency is presumed, in the absence of clear and convincing
evidence to the contrary:
(i) between employer and employee;
(ii) between spouses;
(iii) between joint tenants; and
(iv) among tenants in common.
(4) (a) “Contract price” means the amount agreed
upon by the contracting parties for performing services and
furnishing materials covered by the contract, increased or
diminished by:
(i) the price of change orders or extras;
(ii) any amounts attributable to altered specifications; or
(iii) a breach of contract, including but not limited to defects
in workmanship or materials.
(b) If no price is agreed upon by the contracting parties,
the contract price means the reasonable value of all services
or materials covered by the contract.
(5) (a) “Real estate improvement contract” means
an agreement to perform services, including labor, or to furnish
materials for the purpose of producing a change in the physical
condition of the real estate, including:
(i) alteration of the surface by excavation, fill, change
in grade, or change in a shore, bank, or flood plain of a
stream, swamp, or body of water;
(ii) construction or installation on, above, or below the
surface of land;
(iii) demolition, repair, remodeling, or removal of a structure
previously constructed or installed;
(iv) seeding, sodding, or other landscape operation;
(v) surface or subsurface testing, boring, or analysis; and
(vi) preparation of plans, surveys, or architectural or engineering
plans or drawings for any change in the physical condition
of the real estate, regardless of whether they are used to
produce a change in the physical condition of the real estate.
(b) For the purpose of claiming a construction lien, a real
estate improvement contract does not include:
(i) a contract for the mining or removal of timber, minerals,
gravel, soil, sod, or things growing on the land or a similar
contract in which the activity is primarily for the purpose
of making the materials available for sale or use; or
(ii) a contract for the planting, cultivation, or harvesting
of crops or for the preparation of the soil for planting of
crops.
71-3-523
Who May Claim a Construction Lien - Limitation
A person who furnishes services or materials pursuant to a
real estate improvement contract may claim a construction
lien, only to the extent provided in this part, to secure
the payment of his contract price.
71-3-524
Limitation of Lien for Materials Supplied
(1) A lien for furnishing materials arises only if:
(a) (i) the materials are supplied with the intent that they
be used in the course of construction of or incorporated into
the improvement in connection with which the lien arises;
and
(ii) the intent described in subsection (1)(a)(i) can be shown
by a contract of sale, a delivery order, delivery to the site
by the lien claimant or at his direction, or by other evidence;
and
(b) the materials are:
(i) incorporated in the improvement or consumed as normal
wastage in construction operations;
(ii) specifically fabricated for incorporation into the improvement
and not readily resalable in the ordinary course of the fabricator’s
business, even though the materials are not actually incorporated
into the improvement;
(iii) used for the construction or operation of machinery
or equipment used in the course of construction and not remaining
in the improvement, subject to diminution by the salvage value
of those materials; or
(iv) tools, appliances, or machinery used on the particular
improvement. However, a lien for supplying tools, appliances,
or machinery used on the improvement is limited as provided
by subsection (3).
(2) The delivery of materials to the site of the improvement,
whether by the lien claimant or by another, creates a presumption
that they were used in the course of construction or were
incorporated into the improvement.
(3) A lien arising for the supplying of tools, appliances,
or machinery under subsection (1)(b)(iv) is limited as follows:
(a) if they are rented, the lien is for the reasonable rental
value for the period of actual use, including any reasonable
periods of nonuse provided for in the rental contract; and
(b) if they are purchased, the lien is for the price but arises
only if they were purchased for use in the course of the particular
improvement and have no substantial value after the completion
of the improvement on which they were used.
71-3-525 Extent of Lien
(1) A construction lien extends to the interest of the contracting
owner in the real estate, as the interest exists at the commencement
of work or is thereafter acquired in the real estate, subject
to the provisions of this section.
(2) (a) If an improvement is located wholly on one or more
platted lots belonging to the contracting owner, the lien
applies to the improvement and to the lots on which the improvement
is located.
(b) If an improvement is not located wholly on one or more
platted lots, the lien applies to the improvement and to the
smallest identifiable tract or parcel of land on which the
improvement is located.
(3) If the improvement is to leased premises, the lien attaches
to the improvement and to the leasehold term. Except as provided
in subsection (4), it does not attach to the lessor’s
interest unless he contracted for or agreed to the improvement
before it was begun.
(4) (a) A construction lien is not impaired to the extent
of the value of the work or improvement that is severable
from the real estate if the improvement is to premises held
by:
(i) a contracting owner who owns less than a fee simple interest;
or
(ii) a lessee and the lease is forfeited by the lessee.
(b) If the work or improvement may be removed without harm
to the rest of the real estate, the lienholder may have the
value determined, the work or improvement sold separately,
and the proceeds delivered to him to satisfy the construction
lien. The purchaser shall remove the work or improvement within
45 days of the sale.
(5) If a contracting owner contracts for improvements on real
estate not owned by him as part of an improvement on his real
estate or for the purpose of directly benefiting his real
estate, there is a lien against the contracting owner’s
real estate being improved or directly benefited in favor
of persons furnishing services or materials to the same extent
as if the improvement had been on the contracting owner’s
real estate.
71-3-526
Amount of Lien
(1) A person who has furnished services or materials pursuant
to a real estate improvement contract is entitled to a lien
for the unpaid part of his contract price, subject to the
provisions of 71-3-524 .
(2) A person’s lien is reduced by the sum of the liens
of persons claiming construction liens through him.
71-3-527
through 71-3-530 reserved.
71-3-531 Notice of Right to Claim Lien Required - Exceptions
(1) The following are not required to give notice of a right
to claim a lien as required by this section:
(a) a person who furnishes services or materials directly
to the owner at his request;
(b) a wage earner or laborer who performs personal labor services
for a person furnishing any service or material pursuant to
a real estate improvement contract;
(c) a person who furnishes services or materials pursuant
to a real estate improvement contract that relates to a dwelling
for five or more families; and
(d) a person who furnishes services or materials pursuant
to a real estate improvement contract that relates to an improvement
that is partly or wholly commercial in character.
(2) A person who may claim a construction lien pursuant to
this part shall give notice of his right to claim a lien to
the contracting owner in order to claim a lien.
(3) Except as provided in subsection (4), this notice must
be given no later than 20 days after the date on which the
services or materials are first furnished to the contracting
owner. If notice is not given within this period, a lien is
enforceable only for the services or materials furnished within
the 20-day period before the date on which notice is given.
(4) When payment for services or materials furnished pursuant
to a real estate improvement contract, excluding a contract
on an owner-occupied residence, is made by or on behalf of
the contracting party from funds provided by a regulated lender
and secured by an interest, lien, mortgage, or encumbrance
for the purpose of paying the particular real estate improvement
being liened, the notice required by this section must be
given no later than 45 days after the date on which the services
or materials are first furnished to the contracting owner.
If notice is not given within this period, a lien is enforceable
only for the services or materials furnished within the 45-day
period before the date on which notice is given.
(5) The notice of the right to claim a lien must be sent to
the contracting owner by certified mail or delivered personally
to him. Notice by certified mail is effective on the date
the notice is mailed. If the notice is delivered, written
acknowledgement of receipt must be obtained from the owner.
A person may not claim a construction lien unless he has complied
with this subsection.
(6) (a) A person who may claim a lien shall also file with
the clerk and recorder of the county in which the improved
real estate is located a copy of the notice of the right to
claim a lien, in the form required by 71-3-532. This copy
must be filed no later than 5 business days after the date
on which the notice of the right to claim a lien is given
to the contracting owner.
(b) The notice filed with the clerk and recorder for the purpose
of public notice is effective for 1 year from the date of
filing. The notice lapses upon the expiration of the 1-year
period unless the person who may claim a lien files with the
clerk and recorder a 1-year continuation of the notice prior
to the date on which the notice lapses. The clerk and recorder
may remove the notice from the public record when it lapses.
(c) The continuation statement must include:
(i) the clerk and recorder’s file number of the notice;
(ii) the date on which the notice originally was filed; and
(iii) the name of the person to whom the original notice was
given.
(d) If a notice of a right to claim a lien is required under
this section, a person may not claim a construction lien pursuant
to this part unless there is an unexpired notice of right
to claim a construction lien or an unexpired continuation
notice filed with the clerk and recorder at the time he files
his lien.
(7) At the request of any subcontractor or material supplier
who may claim a lien through him, a person shall furnish to
the requestor within 5 business days:
(a) a description sufficient to identify the real estate being
improved; and
(b) the name and address of the contracting owner.
71-3-532
Content of Notice of Right to Claim Lien
(1) The notice of the right to claim a lien must be in writing
and state that it is a notice of a right to claim a lien against
real estate for services or materials furnished in connection
with improvement of the real estate.
(2) The notice must contain a description sufficient to identify
the real estate against which the lien may be claimed.
(3) The notice must contain the following information and
be in substantially the following form:
NOTICE OF THE RIGHT TO CLAIM A LIEN
WARNING: READ THIS NOTICE. PROTECT YOURSELF FROM PAYING ANY
CONTRACTOR OR SUPPLIER TWICE FOR THE SAME SERVICE.
To: ____________ Date of mailing: __________
(Owner)_______________________________________
(Owner’s address)
This is to inform you that ____________ has begun to provide
_____________ (description of services or materials) ordered
by _________________ for improvements to property you own.
The property is located at __________________________ A lien
may be claimed for all services and materials furnished to
you if this notice is given to you within 20 days after the
date on which the services or materials described are first
furnished to you. If the notice is not given within that time,
a lien is enforceable for only the services or materials furnished
within the 20-day period before the date on which the notice
is given. However, if a regulated lender has provided the
funds for the services or materials described in this notice,
the notice may be given 45 days after the date the services
or materials are first furnished to you. If the notice is
not given within that time, a lien is enforceable for only
the services or materials furnished within the 45-day period
before the date the notice is given.
Even if you or your mortgage lender have made full payment
to the contractor who ordered these services or materials,
your property may still be subject to a lien unless the subcontractor
or material supplier providing this notice is paid. THIS IS
NOT A LIEN. It is a notice sent to you for your protection
in compliance with the construction lien laws of the state
of Montana.
This notice has been sent to you by:
NAME: ___________________________
ADDRESS: ________________________
TELEPHONE: ______________________
IF YOU HAVE ANY QUESTIONS ABOUT THIS NOTICE, PLEASE CALL US
IMPORTANT INFORMATION ON REVERSE SIDE
IMPORTANT INFORMATION FOR YOUR PROTECTION
Under Montana’s laws, those who work on your property
or provide materials and are not paid have a right to enforce
their claim for payment against your property. This claim
is known as a construction lien. If your contractor fails
to pay subcontractors or material suppliers or neglects to
make other legally required payments, the people who are owed
money may look to your property for payment, even if you have
paid your contractor in full. The law states that all people
hired by a contractor to provide you with services or materials
are required to give you a notice of the right to claim a
lien to let you know what they have provided.
WAYS TO PROTECT YOURSELF ARE:
- RECOGNIZE that this notice of delivery of services or materials
may result in a lien against your property unless all those
supplying a notice of the right to lien have been paid.
- LEARN more about the construction lien laws and the meaning
of this notice by contacting an attorney or the firm sending
this notice.
- WHEN PAYING your contractor for services or materials, you
may make checks payable jointly to the contractor and the
firm furnishing services or materials for which you have received
a notice of the right to claim a lien.
- OBTAIN EVIDENCE that all firms from whom you have received
a notice of the right to claim a lien have been paid or have
waived the right to claim a lien against your property.
- CONSULT an attorney, a professional escrow company, or your
mortgage lender.
71-3-533 Notice of Completion
(1) The contracting owner may file a notice of completion
at any time after the completion of any work or improvement.
(2) The following acts or events constitute completion of
any work or improvement for the purpose of filing a notice
of completion:
(a) the written acceptance by the contracting owner, his agent,
or representative of the building, improvement, or structure.
The filing of a notice of completion shall not be considered
as an acceptance of the building, improvement, or other structure.
(b) the cessation from labor for 30 days upon any building,
improvement, or structure, or the alteration, addition to,
or repair thereof.
(3) The notice of completion together with an affidavit of
publication as hereinafter required shall be filed in the
office of the county clerk and recorder of the county where
the property is situated and the notice shall set forth:
(a) the date when the work or improvement was completed or
the date on which cessation from labor occurred first and
the period of its duration;
(b) the contracting owner’s name and address and the
nature of the title, if any, of the person signing the notice;
(c) a description of the property sufficient for identification;
(d) the name of the contractor, if any.
(4) The notice shall be verified by the contracting owner
or his agent.
(5) A copy of the notice of completion shall be published
once each week for 3 successive weeks in a newspaper of general
circulation in the county where the land on which the work
or improvement was performed is situated.
(6) The contracting owner shall give a copy of the notice
of completion to any person who has given the contracting
owner a notice of a right to claim a lien.
71-3-534
Filing With County Clerk - Notification of Owner
(1) The county clerk must endorse upon every lien the day
of its filing and make an abstract thereof in a book by him
to be kept for that purpose and properly indexed, containing
the date of the filing, the name of the person holding the
lien, the amount thereof, the name of the person against whose
property the lien is filed, and the description of the property
to be charged with same.
(2) The clerk shall not file the lien unless there is attached
thereto a certification by the lien claimant or his agent
that a copy of the lien has been served upon each owner of
record of the property named in the lien. Service shall be
made by personal service on each owner or by mailing a copy
of the lien by certified or registered mail with return receipt
requested to each owner’s last known address. The certification
shall state whether service was made by delivery of certified
or registered mail.
71-3-535 Attachment of Lien - Filing
(1) A person’s lien does not attach and may not be enforced
unless, after entering into the contract under which the lien
arises, he has filed a lien not later than 90 days after:
(a) his final furnishing of services or materials; or
(b) the owner files a notice of completion pursuant to 71-3-533
.
(2) (a) The lien must be filed with the county clerk and recorder
of the county in which the improved real estate is located.
(b) The person claiming the lien must certify to the county
clerk and recorder that a copy of the lien has been served
on the owner of record as provided in 71-3-534 (2).
(3) The lien statement must contain:
(a) the name and address of the person claiming the lien;
(b) a description of the real property against which the lien
is claimed sufficient to identify it;
(c) the name of the contracting owner;
(d) the name and address of the party with whom the person
claiming the lien contracted to furnish services or materials;
(e) a description of the services or materials provided;
(f) the amount unpaid for services or materials or, if no
amount is fixed by the contract, a good faith estimate of
the amount unpaid, designated as an estimate;
(g) (i) the date on which the services or materials were first
furnished; and
(ii) the date on which the services or materials were last
furnished; and
(h) a declaration that a notice of a right to claim a lien
was given to the contracting owner or an explanation of why
such notice was not required.
(4) A lien notice that is filed pursuant to this section before
the person claiming the lien has substantially furnished services
or materials pursuant to a real estate improvement contract
is not effective to create a construction lien unless the
lien claimant is prevented from fulfilling his obligation
because of the fault of another person.
(5) Except as provided in subsection (6), a lien attaches
at the commencement of work as defined in 71-3-522 .
(6) A lien attaches when it is filed if it is for the preparation
of plans, surveys, or architectural or engineering plans or
drawings for any change in the physical condition of land
or structures that are not used incident to producing a change
in the physical condition of the real estate.
71-3-536
Content of Lien Notice
The notice for the lien provided for in 71-3-535 may be filed
in substantially this form:
Construction Lien
I, ____________________ (insert name and address of person
claiming the construction lien), claim a construction lien
pursuant to Title 71, chapter 3, of the Montana Code Annotated.
I claim this lien against ___________ (give description of
the real property against which the lien is claimed sufficient
to identify it). The contracting owner is __________________
(insert name of the person who owns the real estate and name
of the person who entered into the contract to improve it).
At the request of _____________ (give name and address of
party with whom person claiming the lien contracted to furnish
services or materials), I provided the following: _______________
(give description of the services or materials provided).
The amount remaining unpaid is ___________ (insert the amount
unpaid; if no amount was fixed by the contract, give your
good faith estimate of the amount and identify it as an estimate).
I first furnished these services or materials on ____________
(give date) and last furnished services or materials on ___________
(give date; if the date has not yet arrived, insert an estimate
of the date on which services or materials will be last furnished
and identify the date as an estimate). I gave notice of the
right to claim a lien as required by 71-3-531 on _______ (give
date) to ___________ (give name of contracting owner). ______________
(If it is not required to give a notice of the right to claim
a lien, state the reason it is not required.)
71-3-537
Acknowledgment of Satisfaction of Lien - Penalty
Whenever any indebtedness which is a lien upon any such real
estate, structure, building, or other improvement is paid
and satisfied, it is the duty of the creditors to acknowledge
satisfaction thereof as in case of a mortgage; and if any
creditor fails to acknowledge satisfaction, as aforesaid,
he is liable to any person injured by such failure to the
amount of such injury and the costs of action.
71-3-538 through 71-3-540 reserved.
71-3-541 Priority Among Holders of Construction Liens
(1) There is equal priority between or among construction
lien claimants who contribute to the same real estate improvement
project, regardless of the date on which each lien claimant
first contributed services or materials and regardless of
the date on which he filed his notice of lien. When the proceeds
of a foreclosure sale are not sufficient to pay all construction
lien claimants in full, each claimant will receive a pro rata
share of the proceeds based on the amount of his respective
lien.
(2) Construction liens attaching at different times have priority
in the order of attachment.
71-3-542 Priority of Construction Liens as Against Claims
Other Than Construction Lien Claims
(1) A construction lien arising under this part has priority
over any other interest, lien, mortgage, or encumbrance that
may attach to the building, structure, or improvement or on
the real property on which the building, structure, or improvement
is located and which is filed after the construction lien
attaches.
(2) An interest, lien, mortgage, or encumbrance that is filed
before the construction lien attaches has priority over a
construction lien arising under this part, except as provided
in subsections (3) and (4).
(3) A construction lien has priority, to the extent of the
value of the work or improvement that is severable, over an
interest, lien, mortgage, or encumbrance that is filed before
the construction lien attaches. If the work or improvement
may be removed without harm to the rest of the real property,
the lienholder may have the value determined, the work or
improvement sold separately on foreclosure, and the proceeds
delivered to him to satisfy the construction lien.
(4) A construction lien has priority over any interest, lien,
mortgage, or encumbrance that is filed before the construction
lien attaches if that interest, lien, mortgage, or encumbrance
was taken to secure advances made for the purpose of paying
for the particular real estate improvement being liened.
71-3-543
through 71-3-550 reserved.
71-3-551 Substitution of Bond Allowed - Filing - Amount -
Condition
(1) Whenever a construction lien has been filed upon real
property or any improvements thereon, the contracting owner
of any interest in such property, whether legal or beneficial,
may, at any time before the lien claimant has commenced an
action to foreclose such lien, file a bond with the clerk
of the district court in the county in which such property
is situated or, if such property is situated in more than
one county, with the clerk of the district court of any county
in which a part of such property is situated.
(2) Such bond shall be in an amount 1 1/2 times the amount
of the lien and shall be either in cash or written by a corporate
surety company. If written by a corporate surety, such bond
shall be approved by a judge of the district court with which
such bond is filed.
(3) The bond shall be conditioned that if the lien claimant
shall be finally adjudged to be entitled to recover upon the
claim upon which his lien is based, the principal or his sureties
shall pay to such claimant the amount of his judgment, together
with any interest, costs, attorneys’ fees, and other
sums which such claimant would be entitled to recover upon
the foreclosure of a lien against the principal.
71-3-552 Lien Discharged Upon Filing of Bond
Upon the filing of a bond as provided in 71-3-551, the lien
against the real property shall forthwith be discharged and
released in full and the bond shall be substituted for such
lien.
71-3-553
Action Upon Bond - Period of Limitation Same
(1) When a bond is filed as provided in 71-3-551, the person
filing such lien may bring an action upon the bond.
(2) Such action shall be commenced within the time allowed
for the commencement of an action upon foreclosure of a lien,
and the statute of limitations applicable to a lien foreclosure
shall apply to an action upon such bond as it would had no
bond been filed.
71-3-554 through 71-3-560 reserved.
71-3-561 Parties
All persons interested in the matter in controversy or in
property charged with the lien or having liens thereon may
be made parties.
71-3-562
Limitation on Actions
All actions under this part must be commenced within 2 years
from the date of the filing of the lien.
71-3-563
Rules of Practice
(1) Except as otherwise provided in this part, the provisions
of Title 25 are applicable to and constitute the rules of
practice in the proceedings mentioned in this part.
(2) The provisions of Title 25 relative to new trials and
appeals, except insofar as they are inconsistent with the
provisions of this part, apply to the proceedings mentioned
in this part. |
