Pre-Lien Notice is Necessary
As we have discussed before, contractors, subcontractors, and material suppliers for a building improvement project should deliver to the property owner a pre-lien notice whenever they provide labor, skill, or material to a project. Contractors, in fact, must include pre-lien notice in their contract with the property owner. No notice in the contract, no possibility of a lien. If there is no contract—which should be uncommon—then notice must be delivered within ten days after the contractor and the owner agree to the work. Subcontractors and other contributors to the building project have a longer time period—45 days—after they first furnished labor, skill, or materials to serve pre-lien notice.
Well … Mostly Necessary
But mistakes happen. Fortunately, Minnesota law provides exceptions. First, pre-lien notice may not be required when the contractor and the property owner are under the same ownership. Second, notice may not be required if the property being improved is a wholly residential multiple dwelling that provides more than four family units. And, third, notice may not be required if the property is non-agricultural and wholly or partially nonresidential real estate if the improvement involves, adds, or maintains more than 5,000 square feet of floor space.
The exceptions are few and limited in scope, which makes sense, given the purpose of pre-lien notice. The legislature adopted pre-lien notice to prevent unsuspecting owners of property from a surprise foreclosure. This shifted the burden onto contractors and subcontractors to give fair and early warning to property owners.
Minnesota courts have followed the legislature’s policy on this matter. When interpreting the language of a pre-lien notice, or when trying to determine whether notice was adequate, the courts will typically reason from a position that favors property owners on the assumption that the professionals providing the services and material are more sophisticated than the property owners. See Dolder v. Griffin, 323 N.W.2d 773 (Minn. 1982) for a good explanation of this principle. (Note, the sophistication argument does not work both ways, as the contractor in Dolder discovered. Even if the property owners are real estate agents and represented by an attorney, notice must be provided.)
Takeaway
Exceptions should not be relied upon. Give notice early and upfront to save from loss later. However, if something should happen, and no notice is given to a property owner who later refuses to pay for work, then there may be a solution. Consult an attorney for further guidance.
© 2019 Rinke Noonan