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Construction Liens--Warning to Contractors!

Most every contractor has faced the situation of a non-paying customer.  Often times, the obvious answer seems to be the filing of a construction lien.  It is cheap and fast and protects you.  Unfortunately, because of some liens getting filed without grounds, the North Dakota legislature saw fit to amend the construction lien statute  to allow a property owner to recover attorney fees if the owner proves a lien invalid or inaccurate.  This is a huge problem for contractors.  An owner can relatively easily argue that the amount of time spent on a job was unreasonable or that there were small errors in an invoice.  The North Dakota Supreme Court in Northern Excavating Co., Inc. v. Sisters of Mary of the Presentation Long Term Care recently issued an opinion interpreting the attorney fee provision.  The Court did help out contractors by holding that a lien that is "reasonably" accurate will protect a contractor from liability for attorney fees.  In the case, however, where the owner succeeding in having the jury knock $17,000 off of the original bill, the Court agreed that the lien was inaccurate and that the owner was entitled to attorney fees.  The attorney fees claimed were more than $30,000, but the issue of the lien was not the only claim.  The Court agreed that only those costs and fees "reasonably expended contesting the lien" could be recovered.  The Supreme Court sent the case back to the trial court to review which attorney fees and costs were "related to the successful contest of the accuracy of the lien." What's the take away from Northern Excavating?  1.  Contractors beware.  Unless you are very confident that there is no room for attacking your lien amount, you may want to consider other options.  2.  Hopefully, the Legislature will be taking a look at cleaning up the Construction Lien statutes.  Clearly one doesn't want frivolous liens to be filed, but the current procedure leaves contractors in a precarious situation.  Please contact the Fremstad Law firm if you have questions about Contstruction Liens or related contracting issues.


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