MECHANICS' LIEN TIME-LINES ARE FOR REAL

By Roger C. Justin

One of the overlooked "secrets" to success in any business is that you should be paid for the materials and/or services which you supply. Unfortunately, every project does not automatically turn into dollars upon sending a bill to a customer. People in the construction industry have a specific advantage in those cases of using the mechanics' lien statutes to insure payment. However, the statutes which are there to protect contractors and suppliers are very specific about what must be done to protect these rights. A recent case from the Minnesota Court of Appeals reaffirms that adherence to all the technical requirements of the statute are necessary to collect under those statutes. In Eischen v. Hildebrandt, a cabinetmaker brought an action against a homeowner for work it had completed in regard to the cabinet work in a new home. Full payment was not made for those cabinets and the cabinet maker attempted to collect the amounts owing through the mechanics' lien statutes. The Court of Appeals agreed with the District Court that the mechanics' lien statement had not been served in a timely fashion, and the mechanics' lien part of the case was dismissed.

In the mechanics' lien statement, the cabinetmaker alleged that its last day of work performed on the project was January 25, 2002. On May 24, 2002, the cabinetmaker mailed a lien statement to the County Recorder where it was filed and recorded on May 28. That filing, because it happened within 120 days of the last day of work, was timely. The cabinetmaker also mailed the lien statement by certified mail to the homeowners on May 24. The statement was mailed to the street address where the work was done. However, the homeowners did not receive the mail at their home, but used a post office box. The homeowner picked up the mail, including the mechanics' lien statement on May 30. The Court found that this was outside of the 120 day time limit, therefore the Mechanics' Lien was untimely and the lien action in District Court was dismissed.

There are several points to be taken from this decision. First, the Court pointed out that timeliness is absolutely essential to the establishment of the lien and that those time limitations are strictly construed. This means that both filing the statement of the claim with the county recorder or registrar and personal or certified mail service on the owner must occur within 120 days of the last day of work. Both things must be accomplished to validate the lien statement.

The second point to be made is that mail service does not occur when the statement is mailed, but when it is delivered or the recipient willfully refuses to accept delivery. Worth noting is that personal service upon the homeowner is one of the options a lien claimant has. In cases where a party cannot be sure that mail service will be timely, personal service should be used.

The third point to draw from this decision is that waiting until the last day to perform service is an unnecessary risk. In all projects, and especially in those where payment is not certain, you should document the last day of work and have a form of calendar or tickler system in place to insure that the time frame is not missed. If you are filing and serving these documents on your own, give yourself plenty of time. If you use an attorney's office or lien service to perform that service, make sure that you have talked to those people well ahead of time to know what time frames they need to put together the documents and make service. It is an unhappy client who comes to our office asking us to prepare and serve the mechanics' lien statement who we tell that we will do our best but we cannot guarantee timeliness because they brought the materials to us too late.

Finally, another point in the decision emphasized the importance of having the correct date of the last day of work on the mechanics' lien statement. In this case, the complaint in district court actually indicated that the last day of work was performed later than January 25. The Court did not specifically base its decision on the last day of work issue, but it points out the importance to the mechanics' lien claimant to accurately identify the last date of work on a project.

It is important to remember the mechanics' lien statutes give powers to contractors and suppliers for collection which are rather unique. However, to take advantage of these collection devices, you need to follow the statutes to the letter. Make sure you have procedures in place so that all materials are filed timely and accurately, or that you work with outside sources who you trust to do the same.

© 2003 Rinke-Noonan Law Firm. Roger Justin is a partner at Rinke-Noonan in St. Cloud. He practices in the area of civil litigation, including actions involving mechanics' liens and construction defects.