We received the contract in December 2019, started work in January 2020, completed early March 2020. We did NOT file a preliminary notice. We were hired by the tenant of a Mall. Do we still have lien rights?
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Apr 20, 2020
Minnesota subcontractors and suppliers must send notice unless an exception applies. There are three different exceptions laid out by § 514.011(4) - but based on the above information, we should look to the third exception. Still, preliminary notices should be sent on all Minnesota jobs considering these exceptions are confusing and considering that notices can prevent the need for lien claims in the first place.
We'll take a deeper look at the exception below, but this article should be useful too: Minnesota Pre-Lien Notice Requirements and Exceptions.
Exceptions to Minnesota's preliminary notice requirements
Under § 514.011(4)(c), if the project isn't agricultural and if it isn't wholly residential, then a notice won't be required if one of these three things is true:
The improvement adds more than 5,000 total usable square feet or floor space; or
The improvement is to real property that already contains 5,000+ total useable square feet or floor space; or
The improvement is to real property exceeding that 5,000 threshold and doesn't involve constructing a new building or an addition to an existing building.
So, to put it plainly: If a Minnesota project is a non-agricultual, non-residential building that exceeds 5,000 square feet - a preliminary notice usually won't be required. Though, adding a new building to the project site could trigger the notice requirement. Assuming this mall
Minnesota mechanics liens and tenant improvements
If a Minnesota owner is aware of the work being done at their property and fails to send or post a Notice of Nonresponsibility, then the owner can be held liable for tenant improvements under a mechanics lien. The owner must provide that notice within 5 days of when they become aware of the work, which is an extremely short timeframe. So, if the owner is aware of the work and that Notice of Nonresponsibility was never mailed or posted at the project site, then lien rights should be available.
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Apr 20, 2020
Thank you. The owner owns the entire Mall (non residential and not agricultural), we did a renovation for a tenant within that mall and the space was less that 5000 sq. ft. NO new construction, only a tenant buildout. Does that pose as an exception?
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Apr 21, 2020
If the work area is less than 5,000 square feet, then the exception described above would seemingly not apply - even if the mall itself exceeds 5,000 square feet. Looking to the other two exceptions under § 514.011(4) - I'm not sure that they'd apply, either.
§ 514.011(4)(a) relieves contractors from notice requirements when the owner and contractor are owned/controlled by the same person. § 514.011(4)(b) applies to projects with 4 or more family units (i.e. like an apartment building).
As mentioned above, if notice was required but not sent on a Minnesota construction project, then mechanics lien rights are likely out the window.
Recovering payment without filing a mechanics lien
Even in a situation where mechanics lien rights might not be available, there are always other recovery tools that could be useful for getting paid. For one, formal invoice reminders are a good way to remind a customer of their debt before escalating the matter.
Or, if it's clear there's already a dispute at hand, then a payment demand letter threatening legal action could be useful, too. Demand letters will generally contain specific legal threats - and since nobody wants to go to litigation, that could work to force payment.
Finally, if need be, pursuing legal claims would be an option. Claims like breach of contract or a claim under Minnesota's prompt payment laws might be on the table, among others. Plus, it looks like Minnesota small claims court could be used to streamline things if the debt is under $15,000. And, finally, placing the debt with a collections agency might do the trick, too.