Understanding Materialmen's and Construction Liens in Montana

When it comes to construction projects, contracts, subcontractors, and suppliers want to ensure they are paid for their labor and materials. In Montana, a construction lien, also known as a materialmen’s lien, provides legal protection to these parties by securing payment for work performed or materials provided. Whether you are a property owner, contractor, or supplier, understanding Montana’s lien laws is crucial for protecting your financial interests. This blog breaks down the basics of construction liens as set forth in Montana Code Annotated Title 71, Chapter 3, Part 5 (2023).

What is a Construction Lien?

A construction lien is a legal claim against a property for unpaid labor, services, or materials provided in a construction project, it ensures that those who contribute to a project have a mechanism to recover unpaid amounts. If properly filed and enforced, a lien can ultimately lead for a foreclosure of the property to satisfy the debt.

Who Can File a Construction Lien in Montana?

A person who furnishes services or materials pursuant to a real estate improvement contract may claim a construction lien. [1]

Steps to File a Construction Lien in Montana

To properly file a lien in Montana, follow these steps:

1.      Provide Pre-Lien Notice of Right to Claim Lien[2]

In Montana, most contractors, subcontractors, and suppliers must give a Notice of Right to Claim a Lien before they can file a lien. The contents of required in a Notice of Right to Claim a Lien are set forth under Montana Code Annotated § 71-3-532. Some exceptions apply:

Who Does NOT Need to Give Notice?

·         General contractors who work directly for the property owner.

·         Employees or laborers who are paid wages.

·         Suppliers or contractors working on large apartment buildings (5+ units).

·         Suppliers or contractors working on commercial properties.

Who Must Give Notice?

Anyone who wants to file a lien but does not have a direct contract with the property owner must provide notice within 20 days after starting work or supplying materials. If they miss this deadline, they can only claim a lien for work or materials provided in the 20 days before giving notice.

Extended Deadline for Lender-Funded Projects

If a project is funded by a lender (like a bank loan), and the loan is used specifically for the construction, the deadline to provide notice is 45 days instead of 20.

How to Send Notice?

·         Certified Mail – Effective on the mailing date.

·         Personal Delivery – The owner must sign to confirm receipt.

Filing the Notice with the County

·         The notice must be filed with the county clerk within 5 business days after it's given to the owner.

·         Notices are valid for 1 year but must be renewed if the lien is not yet filed.

Property Owner’s Responsibility

·         The owner must include their name, address, and property location in the construction contract.

·         If a subcontractor or supplier requests it, the general contractor must provide the owner’s contact details and project address within 5 business days.

2.      File the Lien within the Statutory Deadline[3]

A construction lien must be filed within 90 days after:

·         The last day labor or materials were provided, or

·         The date the project was completed or abandoned.

The lien must be recorded with the Clerk and Recorder’s Office in the county where the property is located.

3.      Include Required Information[4]

A valid lien must include:

·         Name and address of the lien claimant

·         Name of the property owner

·         Description of the work performed or materials supplied

·         Amount owed

·         Property description

·         Date of which work began

·         Date the last work or materials were provided

4.      Enforce the Lien in Court[5]

If payment is not received, the lienholder must file a lawsuit to enforce the lien within two years of filing. If no action is taken within this period, the lien becomes invalid. However, the lienholder still may have other avenues to recover.

How Property Owners Can Protect Themselves

Property owners can minimize the risk of liens by:

·         Requiring lien waivers from contractors and subcontractors upon payment

·         Keeping detailed records of payments and contracts

·         Ensuring proper pre-lien notice compliance from subcontractors and suppliers.

Conclusion

Construction liens are a power tool for ensuring payment in Montana’s construction industry. However, they must be properly executed to be enforceable. This blog provides a broad overview and does not dive into the nuances of construction lien law. Whether you need to file a lien or protect your property from one, working with an experienced attorney can help you navigate Montana’s lien laws effectively. If you need assistance with filing or disputing a construction lien, contact our office today to discuss your options.

[1] Montana Code Annotated § 71-3-523 (2023).

[2] Montana Code Annotated § 71-3-531 (2023).

[3] Montana Code Annotated § 71-3-535 (2023).

[4] Montana Code Annotated §§ 71-3-534, 71-3-535 (2023).

[5] Montana Code Annotated § 71-3-562 (2023).