Construction Liens
Construction liens are a frequent source of disputes in Montana construction projects, and often lead to protracted litigation. Any person who provides labor, services or materials which are incorporated into a structure, either new or remodel, may claim a lien if the owner refuses to pay. In general, such a lien, which is filed on a standard form with the county clerk and recorder where the land is located, must be filed within 90 days after the materials were furnished or labor/services provided.
The requirements for filing a lien are technical and errors may invalidate the lien. Notice is given to the owner at the same time the document is filed. A construction lien is similar to a mortgage in that it constitutes an impediment to title, or to put it another way the lien clouds the title to the real property involved. It is difficult to sell property that has liens on the title. Once a lien is filed, the claimant must commence a lawsuit within two years to enforce the lien, a procedure very similar to foreclosure of a mortgage.
A lien has priority according to the date it was filed with the county clerk & recorder, so it does not have priority of an earlier filed mortgage. However, it will be superior to liens filed subsequent if the construction project has three parties involved, owner, general contractor and subcontractors, there is an additional requirement.
If the general contractor retains subcontractors or orders materials and services, the owner may not necessarily know who those individuals are or what services/materials they are providing, as the contractor may use his own forces or some part of the work. Therefore, if three parties are involved, the subcontractor (such as an electrician or plumber) or person providing materials and services is required to give the owner a document titled Notice of Right to claim a lien within 20 days of first providing services or materials. The document identifies the third party and what type of work he is doing on the project. Failure to provide the notice will greatly cut down the amount which might be claimed in a later lien. The rationale behind this statute is that the owner who has been notified can then take steps to make sure his general contractor pays the subs from the moneys being disbursed by the owner for construction work.
As these matters are technical in nature, an attorney should be consulted before any attempt is made to file a lien. Likewise, the property owner who receives notice of a lien filing should promptly consult counsel.
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