Construction Liens & Litigation
Montana law allows contractors to file construction liens against the property they have been working on, even if they did not contract directly with the property owner. Any person or company that supplies labor or materials for a construction project is entitled to claim a lien against the improved property. Section 71-3-523, MCA, is the Montana statute that authorizes construction liens, formally called mechanic’s liens.
Many contractors are foreclosed from filing a lien because they miss important deadlines during the construction process. A lien must be filed within 90 days of the final furnishing of material or services by the contractor, or within 90 days of the filing of “Notice of Completion” by the property owner. See 71-3-523, MCA. Most homeowners are not aware of their right to file a notice of completion, which starts the timeclock ticking for all potential lienholders. If a Notice of Right to Claim a Lien is required, the Lien Notice must declare that the Notice was served on the property owner or that a Notice is not required.
Many subcontractors are also unaware that they must first file a “Notice of Right to Claim Lien” in most circumstances at the start of the project. There are a few exceptions to this rule. For example, the following contractors would not have to file a Notice of Right to Claim Lien:
- A person who furnishes services or materials directly to the owner at the owner’s request
- A wage earner or laborer who performs personal labor services for a person furnishing any service or material pursuant to a real estate improvement contract
- A person who furnishes services or materials pursuant to a real estate improvement contract that relates to a dwelling for five or more families
- A person who furnishes services or materials pursuant to a real estate improvement contract that relates to an improvement that is partly or wholly commercial in character
Generally, if required, a Notice of Right to Claim Lien must be filed within twenty (20) days after the date that materials and services began to be provided. These Notices are valid for one (1) year after filing, but may be extended an additional (1) year after the filing of a Continuation Notice. If a Notice of Right to Claim a Lien is required, an unexpired Notice of Right to Claim Lien or Continuation Notice is necessary before a lien may be claimed. M.C.A. § 71-3-531. Use the forms provided by the County Clerk and Recorder to make sure the form is correct.
All actions to enforce a lien must be commenced within two (2) years from the date of the filing of the lien. M.C.A. § 71-3-562.
Most importantly, contractors who have a properly filed a lien are entitled to recover attorney’s fees and costs from the homeowner when foreclosing their lien. Thus, it is very important to properly file the lien. Our attorneys can assist contractors with lien filings, as well as litigation over the lien collection, to assure that it is done properly.