For blacksmiths, machinists, farm equipment dealers, construction equipment dealers, welders, garage keepers, mechanics, or aviation operators with an established place of business in North Dakota who have not received sufficient payment after providing services, there are few options that are as effective as a repairman’s lien, which allows a party to file an action in state court against the subject property as well as to foreclose and force the sale of property to satisfy the lien amount. While repairman’s liens are particularly powerful, they also involve a complicated body of law. This article will take an examination of why repairman’s liens are both powerful and complex.
The Benefits of a Repairman’s Liens
There are some distinct advantages of repairman’s liens, which include the following:
- Cash Source. In many cases, a property owner will secure a bond for the amount of a properly recorded repairman’s lien, which will involve the lien transferring from the property to the bond, which provides a source of cash for the satisfaction of the unpaid amount.
- Priority: Repairman’s liens have priority over all other creditors with the exception of subordinate liens or mortgages.
- No Privity Requirement: Repairman’s liens are in rem actions against the subject property, which means that there is no requirement for privity. As a result, repairman’s liens can be recorded even if the party did not contract directly with the person who owned the property.
Complexities of Repairman’s Liens
Some of the various laws and complications associated with repairman’s liens include the following elements:
- Deadlines: In the state of North Dakota, a person does not need to file any statement to perfect the lien if the person retains possession of the property. If possession is not retained, a repairman’s lien must be filed within 90 days after the last date on which they provided labor or materials to a project.
- Notices: A person filing a repairman’s lien must serve the legal possessor of the property by registered mail with notice of the filing within 30 days of the filing of the repairman’s lien.
- Amounts Included in Lien. In the state of North Dakota, in general, a lien is limited to the agreed upon amount or the reasonable value of work done. Damages like attorney fees or consequential damages cannot be added in the amount of the lien.
- Discharge of the Lien. There is not a specific provision in the state of North Dakota about what party is responsible for discharging a lien when the obligation created by the lien is paid. When liens are placed against property, any payment in satisfaction of the lien is considered in the lien’s release.
Speak with a Knowledgeable Business Law Attorney
Given the complexities of mechanics’ lien law, it is critical for contractors, material suppliers, and subcontractors to speak with an attorney knowledgeable in this area of law before taking on a new project. Fortunately, Steve Welle at O’Keeffe O’Brien Lyson Foss understands the complexities of this area of law. Contact Steve by email or by calling him at 701-235-8000 or 877-235-8002.