In South Dakota, contractors and suppliers who are not paid for their work on a construction project can use a mechanics lien to ensure they receive payment. A mechanic’s lien grants the unpaid party a legal claim on the property.

At CRM Lien Services, we specialize in ensuring that you get paid quickly and reliably. We can prepare and file mechanics liens for you, taking into account South Dakota construction lien law and state-specific rules and regulations, including the need for an adequate and ascertainable description of the real estate.

This guide outlines the essential rules, requirements, and deadlines for filing a mechanics lien South Dakota to protect your payment rights.

Key Takeaways

• Eligibility for Filing a Lien: In South Dakota, contractors, subcontractors, laborers, suppliers, and utility providers who contribute to property improvement are eligible to file a mechanics lien to secure payment.
• Filing Deadline: Mechanics liens must be filed within 120 days of the last labor or material provided. It’s safest to file within this window to protect your rights, as the lien remains effective for up to six years.
• Preliminary Notice Requirement: A preliminary notice is only required if a Notice of Commencement is filed. If no such notice is posted, there is no preliminary notice requirement for subcontractors or suppliers.

Overview of South Dakota Mechanics Lien Law

The South Dakota Mechanics Lien Law is a comprehensive set of statutes designed to protect the rights of contractors, subcontractors, and material suppliers involved in construction projects. This law allows these parties to file a mechanics lien, ensuring they have a legal claim to secure payment for their labor, services, and materials.

By providing a mechanism to enforce payment, the South Dakota mechanics lien law helps maintain fairness and accountability in the construction industry. Whether you are a contractor, subcontractor, or supplier, understanding these provisions is crucial to safeguarding your financial interests.

Who Is Eligible to File a Mechanics Lien South Dakota?

In South Dakota, anyone who provides labor or materials for property improvement or development, including such lien claimants, can claim lien rights. This typically includes general contractors, subcontractors, laborers, and suppliers of materials. Additionally, companies supplying utilities such as electricity, water, or power to a construction project in South Dakota are also granted lien rights.

What Details Must Be Included in a Mechanics Lien South Dakota?

The South Dakota Mechanics Lien Statement, regulated by SD Codified Laws §44-9-16, must include the following details:

• A notice of intent to claim a lien
• The amount being claimed
• A description of the labor and/or materials supplied
• The claimant’s contact information
• Details of the party who hired the claimant
• The dates when labor and/or materials were first and last provided
• A clear description of the property
• Information about the property owner
• An itemized and verified account

What Is the Filing Deadline for a South Dakota Mechanics Lien?

In South Dakota, a mechanics lien must be submitted within 120 days from the last date labor or materials were provided. However, there is some uncertainty about whether this deadline applies to the final work on the entire project or specifically to the last work performed by the claimant under their contract.

To avoid any issues, it’s recommended to file the lien within 120 days of the claimant’s own work being completed, regardless of the project’s overall status. The lien will not attach prior to the actual and visible beginning of work unless proper notice is filed by the contractor, providing legal protection for bona fide purchasers or encumbrancers without notice.

Is Notarization Required for a South Dakota Mechanics Lien?

Yes, under South Dakota law, a mechanics lien must be notarized in order to be valid and eligible for recording.

Where Should a South Dakota Mechanics Lien Be Filed and Recorded?

Mechanics lien claims in South Dakota are filed with the county’s register of deeds office. To ensure your mechanics lien is valid, it must be filed in the county where the construction project is located. The register of deeds maintains a mortgage or lien index to track liens affecting the title to real property.

Each county in South Dakota has its own specific regulations and requirements.

Who Is Responsible for Canceling the South Dakota Mechanics Lien Upon Payment?

Under South Dakota lien law, once a lien has been settled through such payment, foreclosure, compromise, or any other means, the lienholder must issue a Satisfaction of Mechanics Lien to the property owner. This document must be signed in front of two witnesses and filed with the Register of Deeds.

Compliance is crucial. If the lienholder fails to provide satisfaction within 10 days of receiving a written request from the property owner or another party, they may face liability for damages, attorney’s fees, and an extra $100 penalty.

When Is a Notice of Furnishing Required in South Dakota?

This notice is only mandatory if the property owner or general contractor files a South Dakota Notice of Project Commencement. Direct contractors do not need this notice to preserve their lien rights. However, filing a Notice of Commencement is optional and triggers the requirement for certain parties to send a Notice of Furnishing to secure their mechanics lien rights. This applies to anyone not directly contracted by the owner or general contractor, including sub-subcontractors and material suppliers to subcontractors.

An exception to these notice requirements exists for individual wage laborers with claims under $2,000.

How to Send a Notice of Furnishing in South Dakota?

After properly completing the notice, the next step is to serve it to the necessary parties. This notice must be sent to both the property owner and the contractor named in the Notice of Commencement. It must be delivered within 60 days after the claimant’s final provision of materials or labor to the project.

While the statute doesn’t specify the method of delivery, it’s best practice to send it via certified or registered mail with a return receipt. This is important because when filing a mechanics lien in South Dakota, you need to attach the post office receipt as proof of mailing for the lien to be valid. Missing this deadline can forfeit your lien rights, though there are other ways to pursue payment if a preliminary notice wasn’t sent.

5 Key Facts to Know About South Dakota Mechanics Liens

Contractors and suppliers in South Dakota have strong lien rights. If they are not paid for work or materials on a construction project, they can file a mechanics lien to expedite payment and protect their interests.

However, it’s important to follow the specific rules and regulations. Here are five key points about South Dakota mechanics lien law:

• The lien must be filed within 120 days of the last date the claimant provided labor or materials.
• The lien must include a statement of the amount due and a description of the property.
• The lien must be verified by the claimant or their agent.
• The lien must be served on the property owner within 30 days of filing.
• The lien must be enforced within six years of filing.
• The lien statement must include specific details as required by law. Such a statement should outline the amount due, the work performed, and a description of the property involved.

1. Most Parties Can File a South Dakota Mechanics Lien

In South Dakota, most parties involved in a construction project, including general contractors, subcontractors, material suppliers, and laborers, are entitled to mechanics lien rights. This also extends to entities providing utilities such as electricity, water, or power. Mechanics liens are generally filed with the county Register of Deeds where the project is located. However, liens related to services for power, telephone, or railways must be filed with the Secretary of State.

2. Filing Deadline for a South Dakota Mechanics Lien Is Vague

Mechanics liens must be filed within 120 days of the last provision of labor or materials to the project. However, it’s unclear if this deadline starts from the claimant’s last work or the last work on the project as a whole. To avoid issues, it’s safest to file within 120 days of your own last date of work. Once filed, a lien remains effective for up to six years unless a property owner serves a “Notice to Commence Suit,” which gives the claimant 30 days to file a lawsuit or lose the lien rights.

Only Subcontractors and Material Suppliers Need to Send a Preliminary Notice

Sub-subcontractors and material suppliers must send a Notice of Furnishing within 60 days of starting work if the general contractor has filed a Notice of Commencement. If no Notice of Commencement is filed, no preliminary notice is required. General contractors and subcontractors are not required to send preliminary notices.

4. A License Is Not Required for Lien Rights

South Dakota law does not mandate that parties must be licensed to file a mechanics lien. However, working without a license where one is required is generally not advisable.

5. Owner’s Demand for Lien Account Can Impact Filing Deadlines

A property owner can issue an “Owner’s Demand for Lien Account” within 15 days of completing the project, requiring the potential lien claimant to provide a lien account. The lien cannot be filed for at least 10 days after the account is submitted. While this delay may seem minor, it could interfere with lien rights if the request is made close to the filing deadline, as the 10-day waiting period does not extend the filing deadline. Additionally, other such lien holders who are not initially included as plaintiffs should be made defendants in the process.

How to File a Mechanics Lien in South Dakota?

Filing a mechanics lien South Dakota is relatively straightforward compared to other states’ lien procedures. Such lien takes effect following the provision of labor or materials, and the state’s preliminary notice requirement depends on whether a Notice of Commencement has been filed, which is not very common. Additionally, the mechanics lien filing deadline is easy to calculate and applies equally to everyone involved in the project.

Conditional Preliminary Notice in South Dakota

Personally, I’m not a fan of states like South Dakota, where sending a preliminary notice is contingent on whether another party has filed a specific document. The challenge with this setup is that subcontractors and suppliers often don’t know if these documents have been filed.

Regardless of opinion, South Dakota has a preliminary notice requirement that only applies if the general contractor files a “Notice of Commencement.” This notice must indicate the start of the construction project and provide the contact information for the prime contractor and the property owner.

One positive aspect of South Dakota law is that if a Notice of Commencement is filed, it must be visibly posted at the job site. This is helpful for subcontractors who are present on-site, but it may not assist suppliers who are located far away.

If a Notice of Commencement is filed, sub-subcontractors and suppliers to subcontractors are required to send a Preliminary Notice to both the property owner and prime contractor within 60 days of their last provision of labor or materials. However, if no Notice of Commencement is filed, there is no preliminary notice requirement in South Dakota.

It’s generally a good idea to send a preliminary notice regardless, as you may not always know whether a Notice of Commencement has been filed, and it’s better to be safe than sorry. That said, Notices of Commencement are quite rare, so it’s likely your project won’t involve one.

Filing a South Dakota Mechanics Lien

In contrast to the conditional nature of the preliminary notice requirement, the process for filing a mechanics lien in South Dakota is quite straightforward.

Mechanics liens must be filed within 120 days from the date the party last furnished labor or materials to the project. This 120-day period applies to all private construction projects, regardless of tier, notice filings, or other factors. All involved parties should ensure their mechanics lien is filed within this time frame.

Once filed, a South Dakota mechanics lien is valid for a long time—up to six years. Unlike states like California, where a lien is only valid for 90 days, South Dakota allows a mechanics lien to remain in effect for six years before it must be enforced. Of course, it’s a good idea to enforce your claim well before the six-year deadline.

Types of Properties That Can Be Liened

A mechanics lien in South Dakota can be applied to a variety of property types, ensuring that those who contribute to property improvements are protected.

These properties include:

• Real Estate: This encompasses buildings, fixtures, bridges, fences, and other structures.
• Mines or Mining Claims: Any property related to mining activities.
• Oil or Gas Wells or Springs: Properties involved in the extraction of oil or gas.
• Railways, Telegraph, Telephone, Electric Light, or Power Lines: Infrastructure related to transportation and utilities.
• Other Improved Properties: Any other type of property that benefits from labor, services, equipment, or materials provided.

Understanding the scope of properties that can be liened helps ensure that your lien rights are properly asserted.

Enforcement of Lien

Enforcing a mechanic’s lien in South Dakota involves filing a lawsuit in the circuit court of the county where the improved property is located. This legal action must be initiated within six years from the date of the last item listed in the lien claim. The process begins by filing and entering the lien statement, followed by pursuing the lawsuit to enforce the lien. By taking these steps, lien claimants can secure their right to payment and ensure that their contributions to the project are recognized and compensated.

Defenses and Remedies

Property owners have several defenses and remedies available when faced with a mechanic’s lien. One key defense is the “Notice to Commence Suit to Enforce Mechanics Lien.” If the lienholder does not file a lawsuit within thirty days of receiving this notice, the lien is forfeited. Additionally, property owners can remove a lien by posting a bond with the court, effectively replacing the lien with a security bond. Another option is to pay the lien amount directly, which results in the lien being released.

While a mechanic’s lien is a powerful tool for securing payment, the process can be complex. Property owners and lien claimants alike are advised to seek legal counsel to navigate the intricacies of filing, enforcing, and defending against such liens. This ensures that all parties’ rights are protected and that the process is handled efficiently and correctly.

Get in Touch

South Dakota provides strong lien rights for contractors and suppliers working on construction projects. Filing a mechanics lien is a straightforward process, but it’s important to be mindful of specific rules, such as the preliminary notice requirements and the 120-day deadline.

Whether you’re a subcontractor, general contractor, or supplier, understanding these mechanics lien laws ensures you can secure payment effectively. With a lien valid for up to six years, it’s crucial to act quickly to protect your payment rights and avoid complications down the road.

At CRM Lien Services, we have been serving customers across the country 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.