Out here in rural Minnesota, we like to do business the old-fashioned way–with a handshake. Even in my law practice, I often feel strange asking someone to sign a retainer agreement before I start working on their issues. So it’s no surprise that many contractors and building tradespeople fail to adequately protect themselves with a written contract and proper notices.
I’m sure every general contractor, subcontractor, and other skilled tradesperson can name off several past clients who have halted work, disagreed with a bill, or just plain didn’t want to pay. You have probably heard about mechanic’s liens but may not know much about how they work. We’ll cover that in a later topic. For now, I want to remind you to protect your lien rights by including a pre-lien notice in your written contract.
Minnesota Statute 514.011 requires contractors to give owners a pre-lien notice at the time the contract is entered into. If you don’t, you lose the right to ask for a lien. The law is very specific about the wording and format of the notice:
“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.”
While courts have awarded mechanic’s liens in some cases where the notice did not comply with the law but the contractor made a good faith effort to comply with the law, it’s a good idea to put the notice language right in your contract in the right size and font. In other cases, lien rights have been lost because the notice was not in large enough font, was not in bold, or failed to include required language.
The notice requirement is detailed and varies depending upon the type of contractor you are and how you communicate with the owner. For specific guidance, please contact my law office.
