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Help with payment when I didn't file the Preliminary Notice

Hi - I have a very difficult client who is resorting to finger-pointing and lies to get out of paying our last 2 invoices. I was just informed of mechanical liens. In reading up, it seems as though I need to file a notice within 45 days of beginning work, which of course I have not done since I am just learning of liens now. I was chatting with you online and was told to send this email to get a response from a lawyer with help and my rights. I own a design company. I am a licensed LLC. But I do not hold a professional license such as a licensed contractor, plumber, architect etc. The project is nearly complete. Mid-August we hit pause on our design work because they were out of money but they continued to ask us questions along the way, they just did their best to reduce the communication so as to save money. They took on getting the marble themselves but I informed them that I would still send them an invoice for the work we had done on the marble to-date and then one final/large invoice on the project for our hours. They are reducing our efforts with things like "it's easy to send an email to a vendor" and "we barely even ask you any questions now." Things that are not tangible, and are rude. We initially said we would pre-bill buckets of hours that they'd pull from. Well, they blew through all of those hours in only a couple of weeks so we started invoicing traditionally (invoice after hours incurred). Now they are using that as their tactic to saying they didn't agree to the hours, which I find humorous because they're the ones that keep calling/texting, etc. I do not wish to get into an arguing match and finger-pointing like they are doing. I simply wish to follow the law by sending them notices asking for payment, and stand our ground by invoicing fairly for the hours we spent on their project. I have also already given them $5000 (I'll double-check that number) of free labor hours, all of which I've tracked in previous invoices I've sent them and that they've paid. They also keep adding on scope with the contractor, and asking him to keep giving them additional work so I know they have money, they just don't wish to pay us for our time as it isn't a physical element in their space. I am in the state of MN.

1 reply

Nov 8, 2019

Preliminary notice is generally required in order to file a Minnesota mechanics lien. However, Minnesota's preliminary notice rules and exceptions are exceptionally complex and confusing (more on that here: Minnesota Pre-Lien Notice Requirements and Exceptions). So, it's safest to send notice anyway, plus it's a good idea to send preliminary notice even when it isn't required.

Who is entitled to Minnesota mechanics lien rights?

Minnesota provides mechanics lien rights to a broad spectrum of construction participants. Lien rights will be available to anyone who provides engineering services or anyone who "contributes to the improvement of real estate by performing labor, or furnishing skill, material or machinery for any of the purposes hereinafter stated..." for the permanent improvement of the property. So, lien rights will be available to most anyone who's provide some work that goes into the permanent improvement of the property.

Do lien claimants need to be licensed?

Minnesota doesn't specifically require that lien claimants be licensed in order to file a valid and enforceable mechanics lien. Of course, it's always a good idea to be licensed if your work requires licensure.

Additional Minnesota mechanics lien resources

If you'd like more background on Minnesota mechanics lien rights, here's a great resource: Minnesota Mechanics Lien Guide and FAQs.

There are always other recovery options outside of the mechanics lien process

If you're unsure of whether you can or should file a lien, or if you're looking for recovery tools that can help before a lien becomes necessary, there are always other options.

Invoice reminders and demand letters can help force payment

Sending a simple and friendly invoice reminder can lead to payment. Sometimes, providing reminders that the debt remains outstanding may be enough of a nudge to push someone to pay. Further, escalating things a step with a payment demand letter can do the trick, too. A demand letter will let recipients know that you're serious about recovering payment and that you're unafraid to do what it takes to get paid. More on that here: Demand Letters for Contractors – How To Write One That Gets You Paid.

The mere warning or threat of a mechanics lien claim can do the trick

Further, note that because mechanics liens are so powerful, the mere threat of a lien claim - through a document like a Notice of Intent to Lien - can be enough to get paid. A Notice of Intent to Lien is usually sent to the customer along with other higher-tiered parties, like the GC and the owner, and lets them know about the debt and informs them that if payment isn't made and made soon, then a mechanics lien will be filed against the project. Due to the drastic nature of lien claims, this will often be enough pressure on a customer so that they'll pay what's owed. More here: What Is a Notice of Intent to Lien and Should You Send One?

Legal claims will often be available

Finally, while nobody wants to deal with a lawsuit, legal claims will generally be available to a business who's performed work but not been paid for that work. Actions under theories like breach of contract, unjust enrichment, or under the Minnesota prompt payment laws may be available, and the mere threat of pursuing those options can push a customer to talk deal. For more information on which legal claims may be available or the most viable, reaching out to a local Minnesota construction lawyer would help to provide some clarity.

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