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How do i prevent a contractor from forcing me to overpay because he is threatening liens

MinnesotaLawsuitMechanics LienRight to Lien

I hired a land clearing contractor to clear up some property at a set price during the course of his job I asked him to price additional work. We agreed on a set price and I now he wants 3 times the agreed amout or he will file a lien. No written contract. How do I stop this?

1 reply

May 28, 2019
This is a question that seems to come up too often. While mechanics liens provide a powerful way to ensure payment of what is due, the power can sometimes also be used to attempt to gain more than what has actually been earned. Exaggerated or fraudulent liens are no better than non-payment issues in the first place.

The first place to start looking at ways to potentially attack a threatened improper lien is whether the work provided even provides lien protection. In Minnesota, courts are split as to whether "site work" such as clearing, grubbing, excavation, grass removal, and silt retention are part of the work of improvement, such that mechanics liens are allowed, or are not part of the ultimate improvement, so as to not have lien protection. To the extent the clearing work is not related at all to a permanent construction improvement, it is more difficult to argue that a lien is the appropriate remedy. In any case, communication with site-prep contractors regarding potential liens may include a assertion that the lien may not be valid, in any case.

Further, in Minnesota, a party who contracts directly with the owner of the improved property (and who has or will hire subs, suppliers, or presumably equipment lessors) must generally provide a "General Contractor's Notice" either in the written contract, or, if no written contract was agreed to, within 10 days of beginning work in order to later qualify for lien protection. This notice must include specific language in order to be effective. If required, the failure to provide the general contractor's notice within the appropriate amount of time is fatal to any subsequent lien claim.

It is likely worth the effort to provide a letter to the contractor informing him/her that you understand the rules and requirements of mechanics lien claims, that there may be issues with the ability to claim a lien at all, in addition to the fact that the lien would be excessive based on your agreement, and that if any lien was filed you would potentially pursue remedies against the contractor for any damages related to the improper lien, including damages related to improper clouding of title, breach of contract, unjust enrichment, etc.

Note, however, that it can be almost impossible to stop somebody from filing a lien, even if the lien is invalid or otherwise inappropriate, if they really want to. The recorder doesn't really (and shouldn't) act as a gatekeeper for the filing of valid liens, so it is sometimes required to fight the lien after it is filed, if the pre-filing communication is insufficient to halt the filing.

When a lien is improper, a property owner may usually institute an action challenging the lien and demanding its removal. Or, the owner could wait until (if) the claimant files an action to enforce the lien, and defend against the claim in that action.

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