Home>Levelset Community>Legal Help>I have signed contract (2/15/2020)with a Pre-Lien Notice signed by the TENNANT, not the Owner of a commercial building.

I have signed contract (2/15/2020)with a Pre-Lien Notice signed by the TENNANT, not the Owner of a commercial building.

I have signed contract (2/15/2020)with a Pre-Lien Notice signed by the TENNANT, not the Owner of a commercial building. I'm the General Contractor that did the Emergency Water Damage dryout/clean up. The Tennant owns the interior and has it for sale right now. But can I put a lien on the property? Do I need to give the owner a notice within 45 days of first day (Feb 15)?

1 reply

Mar 25, 2020

Minnesota contractors may be entitled to file a mechanics lien against the owner's property when performing tenant improvements. § 514.06 of Minnesota's lien statute states that an owner is deemed to have authorized the improvement, even if someone else - like a tenant - is the one who actually authorizes the work. An owner can avoid this liability, however, if they provide a Notice of Nonresponsibility within 5 days of when they become aware of the work. That notice must be given in writing or posted conspicuously at the job site - so a contractor should pretty easily be able to tell whether it's been given. Plus, if the property owner knew about, planned for, or specifically allowed the improvement to be undertaken - the 5-day window to avoid lien liability has very likely passed.

Minnesota's preliminary notice requirements for subcontractors

As for sending a subcontractor's preliminary notice - I'm not sure that's necessary for contractors hired directly by the tenant. § 514.011(2) of Minnesota's lien statute creates the preliminary notice requirement for subcontractors (which must be sent within 45 days of first furnishing). Under that section, only parties hired by someone other than the "owner" must send preliminary notice. But, § 514.011(5) defines an owner really broadly. Under that section, an owner is defined as "the owner of any legal or equitable interest in real property whose interest in the property (1) is known to one who contributes to the improvement of the real property, or (2) has been recorded or filed for record if registered land, and who enters into a contract for the improvement of the real property." (Emphasis added). A tenant would seem to fall under the bolded portion of that definition since, as a result of their lease, they do have some legal interest in the land.

Giving a tenant the contractual pre-lien notice is likely effective, too

Circling back to a point you mentioned in your question: A pre-lien notice that was signed by the tenant, rather than the fee owner of the property, should be effective based on that definition of "owner" discussed in the section above. Because the tenant has some legal interest in the property, they're generally considered an "owner" - at least for the purposes of sending notice.

If the owner gave a Notice of Nonresponsibility, there are still other recovery options

An owner can avoid lien liability for their tenant's improvement if the owner provides a Notice of Nonresponsibility within 5 days of the owner knowing about the improvement. That's a really short timeframe, but it's possible the owner could comply. If that happens, then a lien may be available against the tenant improvements (rather than against the fee interest in the land). Or, legal claims like breach of contract, unjust enrichment, or claims under Minnesota's prompt payment laws could be on the table. Further, sending a debt to collections could be yet another option for recovery. Finally, before official actions like liens, legal claims, or collections come into play - recall that "soft" recovery options can be just as effective. Tools like invoice reminders, demand letters, or even Notices of Intent to Lien can all lead to payment while avoiding a formal dispute.

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