If contractors and suppliers aren’t paid on a construction project in Montana, they can file a mechanics lien or construction liens to secure payment. A mechanics lien is a legal tool that gives the unpaid party a security interest in the property.
At CRM Lien Services, we specialize in ensuring you get paid quickly and reliably. We can prepare and file mechanics liens for you, considering Montana Mechanics Lien and state-specific rules and regulations.
This page explains the rules, requirements, and deadlines for filing a Montana mechanics lien.
Key Takeaways
- Eligibility and Rights: Montana contractors, subcontractors, suppliers, and design professionals can file a mechanic’s lien to secure payment for their work and materials.
- Notice and Filing Deadlines: Preliminary notices must be sent within specific timeframes. The mechanics lien must be filed within 90 days of the last work or material provision or the owner’s Notice of Completion.
- Required Information and Priority: A lien notice must include claimant and property details, a description of labor or materials, the lien amount, and certification of notice service. Mechanics liens generally take priority over later-filed encumbrances, with some exceptions.
Who Can File a Montana Mechanics Lien?
In Montana, mechanics lien rights are granted to parties who provide labor and/or materials under a real estate improvement contract. This includes contractors, subcontractors, material suppliers, equipment lessors, and design professionals such as architects and engineers. Individuals who perform personal labor services under a real estate improvement contract are also eligible to file a mechanics lien.
Montana considers the following work as sufficient to justify a mechanics lien: excavation or fill work, construction or installation on, above, or below the surface of the land, demolition, repair, remodeling, or removal of structures, landscaping operations, surface or subsurface testing, and preparation of plans, surveys, or drawings for any change in the physical condition of real estate, whether or not the change is undertaken.
Is a Written Contract Required to File a Mechanics Lien in Montana?
Generally, a written contract isn’t required in Montana to file a mechanics lien. However, it’s always advisable to have a written contract at the start of every construction project.
When Is the Deadline to File a Montana Mechanics Lien?
In Montana, a mechanics lien, including a Notice of Right to Claim Lien, must be filed within 90 days of the lien claimant’s last provision of labor and/or materials to the project or within 90 days of the date the owner filed a Notice of Completion.
What Information Should Be Included in a Montana Mechanics Lien?
A Montana Construction Lien Notice, governed by Mont. Code §71-3-536 must include the following information:
• Claimant’s information
• Property Description
• Owner’s information
• Hiring party’s information
• Description of labor and/or materials provided
• Lien amount
• Date preliminary notice was served (if required)
• Certification that a copy of the claim was served on the owner
The lien notice must also include information about the right to claim a lien as per Montana’s construction lien laws.
Does a Montana Lien Have Priority Over Pre-existing Mortgages or Other Construction Loans?
It depends. In Montana, a mechanics lien has priority over other encumbrances filed after the lien has been attached to the property. However, a pre-existing encumbrance takes priority over a subsequent mechanics lien unless an exception applies.
If the value of the work or improvement is severable, meaning it can be removed without damaging the rest of the property, the lien claimant may have the value determined and sold separately, maintaining priority regarding the sale proceeds.
If the encumbrance was to secure advances for paying for the specific improvement being liened, a mechanics lien has priority over that encumbrance.
Among competing mechanics liens, all have the same priority and are entitled to a pro-rata share of the proceeds from a foreclosure sale.
Who Cancels the Montana Mechanics Lien When I Get Paid?
In Montana, when any debt that constitutes a lien on real estate, a structure, building, or other improvement is paid and satisfied, it is the creditor’s duty to acknowledge the satisfaction of the debt in the same manner as a mortgage. If the creditor fails to acknowledge satisfaction, they are liable to any person harmed by the failure, covering the amount of the injury and the costs of the action.
Who Needs to Send a Notice of Right to Claim a Lien?
Montana’s construction lien statute is unique, as it specifies who is not required to send notice rather than who must send it. Consequently, all potential lien claimants must send notice to secure lien rights, except for the following:
- Anyone who contracted directly with the property owner
- Wage laborers
- Anyone furnishing labor or materials to a residential property with five or more families
- Anyone furnishing labor or materials to a project that is partially or wholly commercial
- An original contractor who furnishes services or materials directly to the owner at the owner’s request
The last exception can be particularly challenging, as the distinction between residential and commercial projects can be unclear. For example, in the case of JTL Group Inc. v. New Outlook LLP, work on a residential subdivision was deemed commercial because it involved paving roads and installing underground utilities and sewer lines.
What Are the Required Information on a Notice of Right to Claim a Lien?
To be considered a valid preliminary notice in Montana, the document must contain specific information:
- The date of mailing
- The owner’s name and address
- The claimant’s name and address
- A description of the property sufficient for identification
- The statutorily required notice language found in M.C.A. §71-3-532
The notice must comply with the provisions outlined in Montana’s mechanics lien law.
If this information isn’t readily available, the law offers some relief. All direct contracts with the property owner must include the owner and property information. Subcontractors can request this information from the general contractor. Upon receiving a written request from a subcontractor, the contractor must provide the information within five business days.
Essential Facts to Know About Montana Mechanics Liens
Contractors and suppliers have strong lien rights in Montana. If not paid on a construction project, they can file a lien to expedite payment and protect themselves. However, there are specific requirements and rules to follow. The lien of one person may be reduced by the sum of the liens of other individuals who are also persons claiming construction liens.
Eligibility to File a Mechanics Lien: In Montana, any project participant who provides services or materials under a real estate improvement contract can file a mechanics lien. It is unclear if suppliers to parties more remote than a first-tier subcontractor are protected.
The following work is considered lienable:
- Excavation or fill work
- Construction or installation on, above, or below the surface of the land
- Demolition, repair, remodeling, or removal of structures
- Landscape operations
- Surface or subsurface testing
- Preparation of plans, surveys, and drawings
Preliminary Notice: Montana generally requires preliminary notice called a “Notice of Right to Claim a Lien,” but exceptions exist. Contractors with a direct relationship with the property owner are not required to send this notice. It is also not required for projects involving a residence with five or more units or projects that are wholly or partially commercial. Nonetheless, sending preliminary notice may be advisable for safety. There is limited jurisprudence on these issues.
If a project participant sends preliminary notice, it must be served on the property owner within 20 or 45 days after first providing labor or materials, depending on the project type. The 20-day period generally applies, but if the project is not an owner-occupied residence and payment is made by a lender with a security interest in the property, the 45-day deadline applies. After sending the notice, it must be filed with the county clerk and recorder within five days.
Deadline to File: In Montana, all project participants have a 90-day deadline to file a lien. The 90 days start from the last day the participant provided services or materials for the project or from the date the owner filed a Notice of Completion.
Additional Fees: Unlike some states, Montana does not allow additional fees, such as attorneys’ fees, interest, or consequential damages, to be included in the lien amount.
How Do I File a Mechanics Lien in Montana?
If you’re working on a construction project in Montana and haven’t been paid, filing a mechanics lien can be an effective way to secure your payment. Nearly everyone involved in a construction project in Montana has mechanics lien rights. A mechanics lien is one of the most powerful tools for contractors and suppliers to ensure they receive what they are owed.
This guide provides everything you need to know about filing a mechanics lien Montana.
Note: In Montana, a mechanics lien is also referred to as a “construction lien.” Both terms are used interchangeably in this guide.
1. Before You File: Ensure You Have Mechanics Lien Rights
In Montana, mechanics lien rights are granted to anyone who furnishes services or materials under a real estate improvement contract. This broad statement includes most project participants. The contract can be expressed or implied and does not need to be in writing.
2. Montana Preliminary Notice Requirements
To file a mechanics lien, follow Montana’s preliminary notice requirements:
- General Contractors and Wage Earners: If hired directly by the property owner, you are not required to send a preliminary notice. Wage earners or laborers who perform personal labor services are exempt from sending a preliminary notice under Montana statute M.C.A 71-3-531(1).
- Subcontractors, Suppliers, Others: If not hired directly by the owner, you must send a preliminary notice to the owner within 20 days of first delivering materials or labor. File the notice with the county recorder within five days of sending it to the owner.
- Non-Owner-Occupied Properties: If payments are made by a lender with a security interest in the property, send preliminary notice within 45 days.
3. Step 1: Prepare the Proper Mechanics Lien Form
Properly Identify Yourself: Provide your full name, address, and contact information. If filing on behalf of a company, use the company’s full legal name.
Identify the Property Owner(s): Include the property owner’s information. If there are multiple owners, list them all.
Describe the Labor or Materials Provided: Provide a brief description of the work or materials provided.
Identify the Hiring Party: Include the name and contact information of the person who hired you.
State the Amount of the Lien Claim: Specify the unpaid amount. Avoid overestimating or including additional amounts like attorney’s fees or interest.
Provide the First and Last Dates When Labor or Materials Were Provided. Include the start date and an estimated completion date if necessary.
Include a Description of the Property: Provide enough information to identify the property. More detail is better than too little.
Certify That the Preliminary Notice Was Served and Filed: Include a statement certifying that notice was given as required.
Sign and Verify: Sign the mechanics lien. Montana does not require notarization but does require a verification statement.
4. Step 2: Send the Notice of the Lien Claim
Before filing, serve a copy of the lien claim on every property owner by personal service or certified mail with the return receipt requested. Include an affidavit of mailing, signed and notarized, with your lien claim.
5. Step 3: File Your Mechanics Lien
Deadline to File a Mechanics Lien: File within 90 days of the last day of furnishing labor or materials or within 90 days of the owner filing a Notice of Completion.
Where to File the Mechanics Lien: File with the county clerk and recorder’s office in the county where the property is located.
How to Deliver Your Mechanics Lien:
- File in Person: Ensures timely recording and allows immediate resolution of any issues.
- File by Mail: Riskier due to potential delays and rejections.
- File Electronically: Convenient, but ensure legibility and correct formatting.
6. Step 4: Enforce or Release Your Mechanics Lien
Enforce (Foreclose) Your Mechanics Lien: A lien is valid for two years from filing. To enforce, consider filing a lien foreclosure action or sending a Notice of Intent to Foreclose.
Release (Cancel) the Mechanics Lien: If paid, release the lien within five business days at the owner’s request. File the release in the same office where the lien was filed.
Montana Construction Lien Law & Payment Resources
- Ensure compliance with Montana lien laws to protect your payment rights.
- Consult legal resources or a construction attorney for guidance.
Get in Touch
Filing a mechanics lien in Montana is an essential step for contractors and suppliers to secure payment for their work on construction projects. This legal tool provides a security interest in the property, helping ensure that you receive the compensation you are owed.
Understanding and following the specific rules, requirements, and deadlines for filing a mechanics lien in Montana is crucial. The process includes determining your eligibility, meeting preliminary notice requirements, preparing the proper lien form, and filing it correctly within the stipulated timeframe. Failure to adhere to these guidelines can jeopardize your lien rights and your ability to get paid.
At CRM Lien Services, we have been serving customers nationwide with required reference documentation for lien claims since 1986. We assist property owners in navigating the mechanics lien process, informing them about their rights and responsibilities, including providing notices, securing payment, and releasing mechanic’s liens.
We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a mechanics lien, give us a call or shoot us an email.
We would love to work with you and help you lower your risk and get paid fast!
