Contractors & suppliers have strong lien rights in North Dakota. If a contractor or supplier isn’t paid on an North Dakota job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 5 essential things you need to know about North Dakota’s mechanics lien law.
1) Equipment Leasing Co’s Only Have Mechanics Lien rights if in Direct Contact with the Property Owner
North Dakota provides broad protection to parties on a construction project, as contractors, subcontractors, suppliers, suppliers to suppliers, architects, surveyors, engineers, professional soil testers, mappers, and parties involved with excavation and demolition are generally protected. Equipment lessors, however, can only file a mechanics lien if they are contracted directly with the property owner, or if the property owner signs the contract between the equipment lessor and the hiring party.
2) Project Participants Have 3 Years to File a North Dakota Mechanics Lien
North Dakota is unique in that a project participant can file lien rights after the deadline. However, in order to get full rights, adhering to the deadline is crucial. The deadline for a project participant to fully protect lien rights is 90 days after last furnishing labor or materials to the project. If you do not file a mechanics lien within these 90 days, you have 3 years in which to file a lien. This late-filed lien is not effective against subsequent purchasers or encumbrances arising prior to the date of filing the lien. There is some debate as to whether the “first furnishing date” is the first date of the lien claimant’s furnishing or the date the project as a whole started. To be safe and not miss the 3-year deadline, it is advisable to measure from the first date any party delivered to the project.
3) Notice of Intent to Lien Is Required
Preliminary notice is not required, to file a lien, but a Notice of Intent to Lien is required to be sent 10 days before the filing of the lien itself.
4) A Lien on the “Structure” Rather Than the “Property” Can Take Priority
In North Dakota, if you working on a new construction project, you may be able to file a lien against the structure itself and not the land it is on. Material suppliers and laborers can claim this lien if they send a preliminary notice. This lien on the structure itself has priority over prior “title, claim, lien, encumbrance, or mortgage upon the land upon which the building, erection, or improvement is erected.”
5) It’s Always a Good Idea to Be Licensed
In North Dakota, there are no specific requirements that state you need to be licensed to file a mechanics lien. While it is always best practice to be licensed to perform the work, being unlicensed will not invalidate a mechanics lien.