Construction Lien Services of Montana, Inc
Construction Lien Overview
Construction Lien Overview
CONSTRUCTION LIEN OVERVIEW
There are several steps required by Montana law to properly prepare and submit a construction lien. The steps
and formats required by the State must be strictly followed or the party will loose its right to file a lien.
The first thing is to understand distinction between whether the project is private or public. For each type of
project there are differing procedures and requirements:
PRIVATE PROJECTS
The general requirements for private projects are outlined under as follows.
1. Notice of Right to Claim Lien
In order to claim a lien as a subcontractor on a residential project, a lien claimant may be required to file a
Notice of Right to Claim Lien ("Notice") prior to the filing of a the Claim of Lien. The purpose of this Notice is to
let the Owner know that its property may be subject to a lien. If the party is required to file the notice it must
be submitted in the correct form, within 20 days after the work or materials are provided and filed with the
Clerk & Recorder of the county in which the property is located.
A party is not required to file a Notice of Right to Claim Lien if the lien claimant is:
2. Claim of Lien
The construction lien attaches an interest to the Owners property. The Claim of Lien is a legal document
prepared and filed with the county Clerk and Recorder and provided to the owner and interested parties. It is
a notice that the land and improvements may be sold through foreclosure proceedings to satisfy a debt for
labor, supplies or equipment to the contractor, subcontractor, material supplier or design professional. The
Claim of Lien must be in the proper form and contain all the information required by Part 5 - Construction Liens
of the Montana State Code in order to be valid.
The Claim of Lien must recorded no later than 90 days after the providing of services or materials or from the
date that the Owner files a Notice of Completion.
3. Waiver and Release of Lien
Provided that payment for the outstanding amounts is made, a Waiver and Release of the Lien is prepared by
the contractor, material supplier or design professional which is filed with the Clerk and Recorder. The lien is
then removed from the Owner's title.
4. Foreclosing a Claim of Lien
If payment is not received it may then be necessary to foreclose on a the claim of lien - to have the Owner's
property sold to satisfy the debt - a lawsuit must be filed within 2 years from the date the lien was recorded.
Due to the technical and legal nature of this action its a lawyer should be contacted well in advance of the end
of two-year period.
MONTANA PUBLIC PROJECTS
On public projects, because one cannot lien public property, a separate set of laws have been passed that
protect subcontractors, material suppliers and labors that allows them to make claims against a statutory
payment bond. The payment bond is required of general contractors on most Montana public works contracts.
The requirements for filing claim against the payment bond on a public works project are outlined as follows:
1. 30-Day Pre-Claim Notice
According to Montana Code all those who provide services, materials or supplies used in the "construction,
performance, carrying on, prosecution, or doing of any work for the state or any county, city, town, district,
municipality, or other public body shall, not late than 30 days after the first delivery . . . . . or doing of the work,
give notice of right of action on the security." (MCA 18-2-206(11). The pre- claim notice must be delivered
personally or sent by certified mail to the contractor and must state in writing:
The form of the 30 Day Pre-Claim Notice is not specified as with form required by state law on a private project.
2. Notice of Claim
Any unpaid subcontractors, material suppliers and labors are required to "present to and file" a Notice of Claim
to the public body within 90 days after the completion and acceptance of the work. To insure as the
subcontractor, material supplier and labor should present and file the Notice of Claim as soon as they finish
the work or last provide materials/labor if payment is not forthcoming.
The Notice of Claim must state:
4) Claim amount;
5) Name of the general contractors and surety who posted the bond; and
6) Description of the work performed by the Claimant.
Notice of Claim form is specified by Montana statute - MCA 18-2-204 and must be filed with the public agency.
It is also suggested that a copy be sent to the general contractor and it surety.
3. Lawsuit on the Claim on the Bond
If payment is not received it may be necessary to file a lawsuit on a on the bond. Various statutes of
limitations apply depending on the public body and the facts of the project.
Due to the different requirements and complex legal nature of this type of action, a lawyer should be
contacted soon after the Notice of Claim is filed to determine the deadlines for filing a lawsuit.
There are several steps required by Montana law to properly prepare and submit a construction lien. The steps
and formats required by the State must be strictly followed or the party will loose its right to file a lien.
The first thing is to understand distinction between whether the project is private or public. For each type of
project there are differing procedures and requirements:
PRIVATE PROJECTS
The general requirements for private projects are outlined under as follows.
1. Notice of Right to Claim Lien
In order to claim a lien as a subcontractor on a residential project, a lien claimant may be required to file a
Notice of Right to Claim Lien ("Notice") prior to the filing of a the Claim of Lien. The purpose of this Notice is to
let the Owner know that its property may be subject to a lien. If the party is required to file the notice it must
be submitted in the correct form, within 20 days after the work or materials are provided and filed with the
Clerk & Recorder of the county in which the property is located.
A party is not required to file a Notice of Right to Claim Lien if the lien claimant is:
- 1) A person who furnishes services or materials directly to the owner at the owner's request;
2) A wage earner or laborer who performs personal labor services for a person furnishing any service or
material pursuant to a real estate improvement contract;
3) A person who furnishes services or materials pursuant to a real estate improvement contract that
relates to a dwelling for five or more families; or
4) A person who furnishes services or materials pursuant to a real estate improvement contract that
relates to an improvement that is partly or wholly commercial in character.
2. Claim of Lien
The construction lien attaches an interest to the Owners property. The Claim of Lien is a legal document
prepared and filed with the county Clerk and Recorder and provided to the owner and interested parties. It is
a notice that the land and improvements may be sold through foreclosure proceedings to satisfy a debt for
labor, supplies or equipment to the contractor, subcontractor, material supplier or design professional. The
Claim of Lien must be in the proper form and contain all the information required by Part 5 - Construction Liens
of the Montana State Code in order to be valid.
The Claim of Lien must recorded no later than 90 days after the providing of services or materials or from the
date that the Owner files a Notice of Completion.
3. Waiver and Release of Lien
Provided that payment for the outstanding amounts is made, a Waiver and Release of the Lien is prepared by
the contractor, material supplier or design professional which is filed with the Clerk and Recorder. The lien is
then removed from the Owner's title.
4. Foreclosing a Claim of Lien
If payment is not received it may then be necessary to foreclose on a the claim of lien - to have the Owner's
property sold to satisfy the debt - a lawsuit must be filed within 2 years from the date the lien was recorded.
Due to the technical and legal nature of this action its a lawyer should be contacted well in advance of the end
of two-year period.
MONTANA PUBLIC PROJECTS
On public projects, because one cannot lien public property, a separate set of laws have been passed that
protect subcontractors, material suppliers and labors that allows them to make claims against a statutory
payment bond. The payment bond is required of general contractors on most Montana public works contracts.
The requirements for filing claim against the payment bond on a public works project are outlined as follows:
1. 30-Day Pre-Claim Notice
According to Montana Code all those who provide services, materials or supplies used in the "construction,
performance, carrying on, prosecution, or doing of any work for the state or any county, city, town, district,
municipality, or other public body shall, not late than 30 days after the first delivery . . . . . or doing of the work,
give notice of right of action on the security." (MCA 18-2-206(11). The pre- claim notice must be delivered
personally or sent by certified mail to the contractor and must state in writing:
- 1) That it is a notice of the right of action on the security;
2) That the entity giving the notice has started work or the delivery of materials;
3) The name of the contractor or agent who placed the order; and
4) That the contractor and the contractor's security will be held of the unpaid amount if the supplier
is not paid.
The form of the 30 Day Pre-Claim Notice is not specified as with form required by state law on a private project.
2. Notice of Claim
Any unpaid subcontractors, material suppliers and labors are required to "present to and file" a Notice of Claim
to the public body within 90 days after the completion and acceptance of the work. To insure as the
subcontractor, material supplier and labor should present and file the Notice of Claim as soon as they finish
the work or last provide materials/labor if payment is not forthcoming.
The Notice of Claim must state:
- 1) The name of the public entity;
2) A statement that the claim is being made against the bond;
3) The name of the claimant;
4) Claim amount;
5) Name of the general contractors and surety who posted the bond; and
6) Description of the work performed by the Claimant.
Notice of Claim form is specified by Montana statute - MCA 18-2-204 and must be filed with the public agency.
It is also suggested that a copy be sent to the general contractor and it surety.
3. Lawsuit on the Claim on the Bond
If payment is not received it may be necessary to file a lawsuit on a on the bond. Various statutes of
limitations apply depending on the public body and the facts of the project.
Due to the different requirements and complex legal nature of this type of action, a lawyer should be
contacted soon after the Notice of Claim is filed to determine the deadlines for filing a lawsuit.
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| Liens are one of collect unpaid construction |