MECHANIC'S LIENS: Questions & Answers

Q: Can a lien claimant recover on a mechanic's lien if the lien claims too much money is owed?

A: This question is answered by the mechanic's lien statute. In pertinent part, the statute provides that a mechanics' lien may not be perfected "for a greater amount than the sum claimed in the lien statement, nor for any amount, if it be made to appear that the claimant has knowingly demanded in the statement more than is justly due." Minn. Stat. §514.74 (2006). Contract price is rebuttably presumed to describe the reasonable value of the improvement. An "honest mistake" or "mere failure to prove some items in the lien statement" is not enough to violate the statute. In order to deprive the claimant of his right to a lien under this statute there must be a showing of fraud, bad faith, or an intentional demand for an amount in excess of that due.

Q: Are attorney's fees recoverable in a mechanic's lien action, and if so, then how much can the court award?

A: In a mechanic's lien foreclosure action, a prevailing lienholder is entitled to "costs and disbursements to be fixed by the court." Minn. Stat. §514.14 (2006). As part of the lienholder's costs and disbursements, the court may award reasonable attorney fees. Although the award of attorney fees in a mechanic's lien foreclosure claim is discretionary, the district court should review: (1) the time and effort required, (2) the novelty or difficulty of the issues, (3) the skills and standing of the attorney, (4) the value of the interest involved, (5) the results secured at trial, (6) the loss of opportunity for other employment, (7) the taxed party's ability to pay, (8) the customary charges for similar services, and (9) the certainty of payment. Significantly, attorney fees awarded should be in proportion to the mechanic's lien judgment. However, attorney's fees awards greater than the amount of the mechanic's lien are occasionally awarded.