I currently have 2 projects that are due on February 27, 2023. These invoices are net-30 and beyond the 10 day marker I would need to send a preliminary notice without having it in the contract. One is residential the other is light commercial. The contract used when signing these clients on are had a lien rights section but isn't worded exactly as Levelset says it needs to be worded. Do I still have lien rights? If I don't, can I still send a preliminary notice to put the insurance carrier on point? What are my options if I cannot apply the lien? I'm in the business of emergency water damage mitigation. I don't normally give an estimate for the work I do. If I do, it is a verbal estimate. Do I have to have a price in my contract in order to lien a property? If so, how does one deliver any sort of accurate estimate when there are more variables than you can count?
It sounds like you’re in a very complicated business. You’re also working in a highly regulated industry in a state with far too many rules. If you don’t have a legal services provider you can consult with these questions, the cost of the mistakes you’re going to encounter will far exceed the cost of good legal advice.
You mention doing residential work without having the required pre-lien notice in your contract. Minnesota law requires a licensed residential contractor have the pre-lien notice in the contract. It is very likely that you lost your lien rights by not having a contract that complies with Minnesota law for licensed contractors. Sending the notice after the contract, even within the 10-days, likely will not save you. I suspect that if you don’t have the notice in your contract, you don’t have a lot of other things that are required.
In Minnesota, contractors are not allowed to assist in the preparation of an insurance claim. Contractors who work in renovation work where insurance proceeds will be used to pay for the work need to understand where the lines are drawn for what you can and cannot do. Most importantly, renovation contractors don’t have contracts with insurers, they only have contracts with owners. Do you have a contract that makes clear it is the owner that has to pay you, regardless of whether they recover money from insurance?
The scope of work and price for the work are considered necessary terms to form a contract. Renovation contractors working in Minnesota that rely on “per insurance proceeds” contracts are in very risky territory. If the owner pays, you have no worries. If not, it can be very difficult to collect. When you record a lien, you cannot claim an amount more than the price for the work you did. If you get the price wrong, you can blow up the lien or worse, you may commit a slander on title. Without an agreed-upon price for your work, you bear the burden of proving the amount you claim on the lien does not overstate the work you did.
When you’re ready to sleep well at night knowing that you’re business is compliant with all Minnesota laws and rules, find yourself a knowledgeable attorney you can partner with. There you’ll find answers to all of your questions.