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Can you file a lien if part of the property has been sold?

South DakotaLien Deadlines Right to Lien

My company has an on-call sewer maintenance relationship with a large property owner in Rapid City. Do we file a lien on each individual property or the company as a whole? They have also sold a subdivision that we are still owed money on. It has been less than 60 days for those properties.

1 reply

Jan 8, 2020

First, note that mechanics liens attach to the property where work was performed - not against any individual or any company. And, as a result, claimants will generally be able to file their mechanics liens against property where they've worked even after that property has been sold by the owner that hired them. More on that here: What Happens If I Filed My Mechanics Lien After the Property Was Sold? Further, note that when mechanics liens rights arise for work done which spans multiple, separately owned properties - liening those properties would generally require filing a separate mechanics lien against each property. While one lien may be able to span multiple properties owned by the same individual or business, liens against separate owners must usually be made separately. With the above in mind, when work has been done on a large development, lien claimants may be able to file one lien before the properties are subdivided and sold. However, once those sales take place, multiple liens will likely be required. And, even if they aren't necessarily required to be brought separately - separate liens are likely the safest way to proceed. Further reading: Filing a Lien on a Project with Multiple Properties.

Filing a mechanics lien on a development in South Dakota

§ 44-9-20 of the South Dakota mechanics lien statute allows a claimant to file one mechanics lien against all of the properties in a development when the claimant was hired under one general contract with the owner. That section continues to state that, alternatively, the claim may be filed against individual lots with the amount of the claim appropriately proportioned among the properties where the work was done. This section puts lien claimants in a tough spot. It clearly allows a claimant to file one lien against multiple lots when the work was all under one general contract with the owner of those lots. However, it doesn't provide any insight into what should happen if those lots are sold by the owner prior to the attachment of any lien. So, by the letter of the law, it might be possible to file one lien against separate lots when hired by the former owner of all those lots. But, when some or all of the properties were sold to individual owners, that might be a riskier way to go about making a claim. So, the safer option may be to file individual claims against the individual properties for the value of the work done at each.

Additional South Dakota mechanics lien resources

I hope that information was helpful! Considering the number of variables in play with work spanning an entire development, it might be helpful to consult with a local South Dakota construction attorney to have them review the situation and project documentation and advise on how best to move forward. For a little more information on South Dakota mechanics liens: - South Dakota Mechanics Lien Guide and FAQs - Guide To Filing Mechanics Lien in South Dakota

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