Assisting Clients with Liens
A lien allows a creditor or bank to sell a mortgaged or collateral property in order to recoup losses when an individual fails to meet the loan specifications or payments. A lien can be voluntarily placed through the signing of a mortgage/loan or by the government if taxes are left unpaid.
The mortgage is an interest in real estate that the borrower gives to the lender as security for performance of the borrower’s obligation to repay the debt. In Minnesota, a mortgage is a lien on the borrower’s property and the borrower retains title to the property. If the borrower does not repay the loan according to the terms agreed to by the parties, the lender may foreclose on the mortgage.
Issues addressed include:
- Warranties of Title: Except where disclaimed, sellers warrant that they have good and valid title to the goods being sold and that they may rightfully transfer title to the buyer.
- Payment of Taxes, Charges and Liens: Properties may have unpaid taxes and liens against them. It is important to thoroughly research a property before purchase.
- Environmental Representations and Indemnities: Many times environmental issues can arise in business transactions and there are several phases of environmental due diligence when building.
- Insurance Requirements: When improving property, there is additional insurance needed to protect the property owner.
- Application of Insurance and Condemnation Proceeds: When a public entity exercises its powers of eminent domain over a property owner, the property owner wants to get as much as possible from the sale.
- Defaults: With mortgage defaults reaching record levels, it is important that if you are a property owner who has been served with a default notice to contact us immediately for assistance.
A mechanic’s lien is a document that guarantees payment for contract services or improvement services on a piece of property. If a bill is left unpaid, a contractor can sign a mechanic’s lien which will ensure payment. A mechanic’s lien gives incentive to the property owner to pay the contractor and is a prerequisite for a foreclosure filing. By placing a mechanic’s lien on a property, the encumbrance makes it difficult for the property owner to sell or re-finance the property without first paying the lien.
Contractors, as well as subcontractors and suppliers who have a contract with a general contractor, can file a mechanic’s lien. A lien claimant must file a Statement of Lien with the county recorder within 120 days of the completion of work. A copy must be personally serviced or sent by certified mail to the owner or his/her agent. The lien claimant must bring a legal action to enforce the lien within 1 year of the date of the last labor, skill or material provided under Minnesota Statute Section 514.12.
In order for a contractor or subcontract to claim a lien, a contractor must provide the form language under Minnesota Statute Section 514.011 advising the property owner of his rights and the possibility of a lien.
The property owner has the right to demand the lien holder furnish an itemized account of the lien, the total amount due and the full name and address of the lien claimant within 15 days of the completion of the contract.
Mechanic’s liens have complicated rules under Minnesota law. At Klun, we can assist you navigate these laws, whether you are the contractor or property owner. Do not wait to call us if you have been served with documents. Call us today to schedule an appointment to discuss your matter.
Klun Law Firm can help you through your next real estate transaction. Call us today at 1-877-365-3221.