Mechanics liens and green construction cross paths pretty often. Just recently we’ve seen a landmark decision regarding the lienability of wind turbine construction. We’ve also discussed why litigation in green construction seems scarce and recent updates to the California PACE program. In all of these posts, we take a look at whether green construction is treated differently than traditional construction counterpart, but one thing is for certain: if construction is involved, payment problems will follow. A recent story from the Land of 10,000 lakes is a great reminder- as much as $85M in liens may be in play on a massive Minnesota solar project.
Minnesota Solar Project Faces Liens Galore
The Minnesota Star Tribune has the full story.
About one year ago, Aurora, owner of a Minnesota solar project, sent its prime contractor, Biosar, a default notice claiming Biosar failed to comply with safety and environmental obligations. This occurred after a significant portion of the project had been completed. Months later, Biosar notified its subs that they would go unpaid due to the lack of funds. Aurora actually picked up the tab, paying out $25M in payments owed by Biosar to the subcontractors. Attempting to recover those payments and to clear liens on the property, Aurora’s parent company sued Biosar’s. The Biosar camp pointed the finger back at Aurora, claiming that it was Aurora’s actions that caused the project to fall apart.
As the dispute between Aurora and Biosar snowballed, work continued at the expense of the subs. They continued to work toward the completion of the project, all while liens accumulated on Aurora’s property. All told, the subcontractors may be owed as much as $85M. In an effort to recover on the Minnesota solar project, over 20 liens have been filed. There are so many liens on the project, which spans multiple counties, that all off the actions have actually been consolidated to one court. One of the creditors even went so far as to propose a massive $108M payment bond to facilitate the payment process. No matter the solution, the subcontractors understand that it will be a long road to recover payment.
There must be something in the water. Not even a year ago we wrote about contractors going unpaid in Minnesota’s Iron Range. While mining and green construction seem like polar opposites, the common denominator remains: with construction payment comes financial risk. Recovery may be a long road, but asserting lien rights is a subcontractor or supplier’s best bet in a situation like this. However, a claimant still must be careful enforcing a Minnesota mechanics lien.