Filing a lien on a contracted project

2 weeks ago

We have a contract to install underground irrigation on a multi-use building. The contracting company is not operating at full steam any longer, they are reorganizing or selling or closing (???). We received a letter promising that they would make small payments on the remaining contract value but they haven’t even done that successfully. We filed a lien but heard the property sold 2 days earlier. Any suggestions?

Senior Legal Associate Levelset

That’s an interesting situation, and I’m sorry to hear that you’ve had so much trouble with this project. First, it’s worth noting that even when the project property is sold before a mechanics lien claimant is able to file their lien, that won’t necessarily impact the validity of the claim. Levelset discusses that in further detail here: What Happens If I Filed My Mechanics Lien After the Property Was Sold?

The Monatana mechanics lien statute doesn’t specifically provide for what happens when a property is sold after work begins but before a lien is filed. § 71-3-525(1) does touch on ownership a bit, stating that “A construction lien extends to the interest of the contracting owner in the real estate, as the interest exists at the commencement of work…” Meaning, whatever ownership interest the owner has at the start of work is lienable, and any additional interest acquired by that contracting owner throughout the life of the project would also be lienable. This seems to indicate that the original ownership interest is lienable, even if it changes during the life of the project. Plus, generally – the right to file a mechanics lien ties to the property, itself, rather than the party who owns it (as long as the work was authorized, of course). So, as long as a mechanics lien is properly and timely filed, presumably, the sale of the property wouldn’t prohibit the filing of a valid and enforceable lien – and the new owner may have to deal with the lien as well.

As far as information regarding how to recover on the filed lien, this is a great resource: The 4 Steps to Take After Filing a Mechanics Lien. In addition to the steps described in that article, it might be helpful to send any notices (like notice of the lien filing, Notice of Intent to Foreclose, or demand letters) to both the prior owner and new owner. That way, both parties might feel the heat, and that might be helpful in compelling payment.

Your answer or comment: