Perspectives

Current through June 1, 2025

Whether you’re a subcontractor, supplier, or equipment rental provider, navigating Minnesota’s lien and bond laws correctly is the difference between getting paid and losing your leverage. While Minnesota hasn’t implemented substantive statutory changes over the last year, it’s still critical to understand the rules, deadlines, and nuances that apply to commercial and public construction projects.

Private (Commercial) Projects: Mechanic’s Liens in Minnesota

Who Has Lien Rights?

You may file a mechanic’s lien if you have a contract with:

• The owner
• The general contractor
• A subcontractor
• Or in many cases, even a sub-subcontractor (though enforcement at this tier may be challenged).

Preliminary Notice Requirements: Simple for Most, Critical for Some

Minnesota keeps this straightforward-no preliminary notice is required on commercial projects unless the project is small (under 5,000 sq. ft. of new construction or additions).

For these small commercial projects:

• Serve preliminary notice within 45 days after your first date of furnishing
• Notice must be served via certified mail.
• Minnesota applies the “mailbox rule”, meaning service is effective the day you drop it in the mailbox.

If you’re unsure about square footage, contact an attorney early-missing this notice kills your lien rights.

When to File Your Lien

Your mechanic’s lien must be:

• Filed with the district court within 120 days after your last date of furnishing labor or materials.

This is a hard deadline-no exceptions, no extensions. 

Foreclosure Lawsuit Deadline

Minnesota requires one of the strictest enforcement timelines in the country:

• You must file your foreclosure action and personally serve all required parties within one year of your last furnishing date.

This is different from many states where service can happen after filing.

Plan Ahead: Most lien claimants should start this process by month 10 to allow adequate time for title search and personal service.

“Double Jeopardy” Lien Rights

One of the most claimant-friendly features of Minnesota lien law:

• A lien remains valid even if the owner already paid the contractor in full.

Your lien attaches to the property regardless of whether money has already left the owner’s hands.

Public Projects: Payment Bond Claims in Minnesota

When you’re working on state, municipal, or other public projects, mechanic’s liens are not available. Instead, your protection comes from the payment bond.

Which Projects Require a Payment Bond?

If the prime contract is $175,000 or more, the general contractor must furnish:

• 100% payment bond, and
• A performance bond.

If the public body fails to obtain a bond, they are financially liable to unpaid subcontractors and suppliers. 

Who Can Make a Bond Claim?

You’re eligible if you contracted with:

• The prime contractor, or
• A subcontractor.

While many sub-subcontractor claims have succeeded historically, sureties increasingly challenge them-so proceed with caution.

Preliminary Notice? Not Needed.

Minnesota does not require any early notice to secure bond rights.

Final Bond Claim Notice Deadline

This is critical.

You must:

• Serve a written bond claim notice
• Via certified mail
• On both the general contractor and the surety
• Within 120 days after your last date of furnishing labor or material

Use the addresses listed on the payment bond document. 

A notice sent to the wrong address-even if the company receives it-may be considered invalid.

Tip: Request the payment bond early-ideally at project kickoff.

Does the Mailbox Rule Apply?

Unlike private projects, the “mailbox rule” has not been confirmed for public bond notices.

To be safe:

Make sure the GC and the surety receive the notice before day 120.

Lawsuit Deadline on Bond Claims

Your lawsuit against the surety must be filed within one year of your last furnishing date. This mirrors the private lien foreclosure deadline.

No Lien Against Public Funds

Minnesota does not allow filing a lien against money held by the public entity (unlike some other states). Bond claims are your only remedy-unless the public body failed to obtain a bond.

Other Key Minnesota Construction Law Notes

Equipment Rental

Rental equipment providers have full lien rights and may also assert bond claims.

Attorney’s Fees

Minnesota courts may award attorney’s fees:

• In mechanic’s lien foreclosure actions
• And in bond claim litigation against a surety

This makes enforcement more economically viable.

Pay-If-Paid Clauses

These clauses can be enforceable-but only if the contract language is clear and unequivocal. If enforceable, your right to payment may be contingent on the contractor receiving payment from the owner.

2025 Takeaways: What Minnesota Claimants Should Be Doing

• Track your first and last furnishing dates carefully. These control all deadlines.
• Request the payment bond early on all public projects.
• Serve notices by certified mail, and keep mailing receipts.
• Calendar the 120-day and one-year deadlines immediately when a project begins.
• Act early-especially on anything requiring court filing or personal service.
• Don’t assume the GC or owner will “take care of it.” Lien and bond rights are self-help tools; protect yourself.

Navigating Minnesota’s lien and bond laws can feel complex, but you don’t have to manage it alone. Protecting your payment rights starts with understanding your deadlines, documenting your work, and taking action early-no matter the size of the project. At Wagner, Falconer & Judd, our construction law team helps contractors, suppliers, and equipment rental companies safeguard their interests and avoid costly missteps. If you have questions about a specific project, notice requirements, or enforcing a lien or bond claim, our attorneys are here to guide you every step of the way. Reach out to WFJ for clear answers, practical support, and the confidence that your rights are protected.

When it comes to securing payment on high-dollar construction and equipment projects, lien and bond rights are some of the most powerful tools available. However, protecting those rights isn’t automatic-it requires precision, proactive tracking, and strict adherence to deadlines. Missteps, even small ones, can completely forfeit your ability to collect.

Here’s how you can efficiently safeguard your interests and streamline the lien and bond process:

Start with Solid Documentation

To support a lien claim, you need factual, organized records. You should consistently maintain:

• The Contract
• Job Level Tracking
• Credit Supplement Sheets
• Notices (Preliminary, Notice of Intent, etc.)
• Individual Invoices
• Proof of Delivery to the Jobsite

Without this backup, you won’t have the documentation needed to sign the lien affidavit. In fact, missing required notices can invalidate your lien entirely.

Prioritize Timely Notices

Each state has its own strict deadlines and notice requirements that, if missed, can be fatal to your lien rights:

• Utah: Preliminary notice must be provided within 20 days from first furnishing. It must be filed through the state’s central registration office. Failure to do so waives lien rights.
• Missouri: A 10-day Notice of Intent to Lien must be served to the property owner before filing. If the request comes less than 7 days before the deadline, you may be out of time.

Recommendation: Always send notices via certified mail and keep receipts. This documents the delivery timeline and helps ensure your notices are legally valid.

Confirm Proof of Delivery

It’s not enough that materials are shipped-you need to prove they made it to the jobsite. Proof of delivery confirms the last furnishing date and supports your lien rates. Materials sitting at a customer’s warehouse or another offsite location won’t count.

Verify the Correct Owner

Sending preliminary notices to the wrong owner can cause you to lose your lien rights entirely. Before sending notices, confirm ownership records to ensure you’re sending them to the legal property owner.

Engage Legal Support Early

Working with your legal partner early in the process is key. Request lien and bond assistance from your attorney at least 14 days before the filing deadline. Gathering backup from branches or project managers should start at least 20 days before the deadline.

At WFJ, we encourage you to reach out as soon as you identify a potential issue. Even if you’re unsure of the next step or don’t fully understand what’s being requested, we’re here to help walk you through it. We can also assit with opinion letters and answer questions along the way.

Takeaway

Safeguarding your lien and bond rights requires proactive planning, meticulous recordkeeping, and attention to deadlines. When these steps become part of your regular credit and collections process, you’ll protect your right to payment and dramatically reduce your risk.

If you need help navigating the process, our team is always happy to get on a call and guide you through it.

California has taken a significant step in debt collection regulation by expanding the Rosenthal Fair Debt Collection Practices Act (RFDCPA) to cover specific commercial debt obligations. This move introduces a new layer of legal exposure for creditors, lenders, and collection professionals involved in commercial finance-particularly those engaging with individual borrowers and personal guarantors.

As of July 1, 2025, covered commercial debts in California will be subject to the same strict collection practices previously reserved for consumer debts.

This includes avoiding:

• Harassment or abusive collection practices
• Contacting a debtor’s employer without authorization
• Communicating with a represented debtor
• Any deceptive or misleading collection tactics

Key Legal Update: What Senate Bill 1286 Changes

Traditionally, the RFDCPA applied only to consumer debts-obligations incurred primarily for personal, household, or family use. Now, the law will include:

• “Covered commercial credit” and “covered commercial debt”- defined as debts owed by natural persons, including personal guarantors, for commercial purposes, if the total transactional value is $500,000 or less.
• Types of debt affected include:
  • Commercial loans
  • Accounts receivable financing
  • Factoring and asset-based lending
  • Lease financing
  • Open-end credit lines

This means any individual-whether acting as a direct borrower or as a personal guarantor of a business obligation-will receive protections under the RFDCPA, provided the transaction meets the dollar threshold.

Effective Date and Scope

• Applies to commercial debt entered into, renewed, sold, or assigned on or after July 1, 2025
• Does not apply retroactively to prior transactions
• Applies to original creditors as well as third-party debt collectors and debt buyers

Implications for Credit and Finance Professionals

Violations of the RFDCPA can result in:

• Actual and punitive damages
• Attorney’s fees and costs awarded to the debtor
• Reputational and legal risk to your organization

Best Practices: Preparing for Compliance

 To position your business for regulatory readiness, we recommend the following steps:

Audit Your Commercial Collections Process

Review your current collection protocols, especially those involving personal guarantors or individual borrowers in California. Ensure all communications and outreach methods meet RFDCPA standards.

Implement Training for Staff and Third Parties

Educate internal collections teams, customer service representatives, and any third-party collection vendors on the new legal requirements. Emphasize prohibited conduct, including harassment, unauthorized employer contact, and deceptive communications.

Update Commercial Loan Documentation

Revisit your loan agreements and guaranty language to align with anticipated enforcement risks. Ensure clear delineation between business and personal obligations.

Strengthen Recordkeeping and Communication Controls

Ensure you have robust documentation of all borrower communications and can demonstrate compliance if challenged.

Partner with Legal Counsel Proactively

Engage experienced counsel to review your California-based commercial lending and collections operations. WFJ can help you identify exposure areas and implement changes before the law takes effect.

This new bill represents a growing trend of consumer-style protections being extended into the commercial finance space. For credit and finance professionals managing portfolios with individual guarantors or natural-person borrowers, this is the time to act.

WFJ is here to help you navigate this shift with clarity and confidence. Reach out to us today to learn how this new law may impact your business. 

Chasing down overdue payments can drain valuable time and resources. You’re balancing the need to maintain customer relationships with the hard reality that unpaid invoices impact cash flow and threaten financial stability. That’s where WFJ comes in.

Working with a legal team for collections-rather than a traditional agency-gives you a strategic edge. At Wagner, Falconer & Judd, our collection services combine the power of proactive outreach with the legal backing you need to get paid.

Here’s how our process works and why it adds value at every step.

A Transparent, Legal-First Process from Day One

When you place an account with WFJ, whether by email or through our secure portal, our team immediately gets to work. Within 24 hours, a written demand is sent on your behalf. This first step signals to your debtor that the matter is now in the hands of a law firm-often motivating a quicker resolution.

Ongoing Contact from Experienced Collectors

Our collectors begin calling the debtor right away and continue making 2-3 calls each week. These calls are more than just reminders-they’re strategically crafted conversations backed by a legal presence, designed to move the conversation toward resolution.

Full Control Over Payment Plans & Settlements

All payment plan proposals or settlement offers go directly to you for approval. We don’t accept anything without your say-so. This ensures you retain control of the terms and can align payment solutions with your broader financial strategy.

Prompt Remittance

Once a payment is received, it’s held in our trust account for three weeks. After that, you’ll receive a remittance check for the full amount collected, minus any agreed-upon fees. You get clear, timely disbursements and detailed documentation for your records.

Final Demand Letters & Legal Escalation

If the account remains unresolved after initial outreach, we send a final demand letter within 30 days of placement. If further legal action is needed, our attorneys may recommend retaining local counsel and proceeding with a lawsuit. We’ll walk you through the cost and timeline (typically 7-10 days to file after your approval.)

Clear Closure or Collection Outcomes

Whether an account is paid in full, sent to suit, or utimately deemed uncollectible, we keep you informed every step of the way. You’ll always know where things stand-and when to write off the debt if necessary.

Why Legal Collections Matter

Working with a law firm like WFJ means more than just persistent follow-up. You get:

• Increased credibility- Debtors are more responsive when they know an attorney is involved.
• Custom Strategy– We tailor each case to your goals, not just a quota.
• Legal Recourse– When necessary, we’re ready to take action beyond what traditional agencies can offer.

If you’re ready to collect what you’re owed while preserving customer relationships and maintaining legal protection, we’re ready to help. Connect with us today to place an account or learn more about how our collections team can support your bottom line.

Ready to get started?

In part one, we explored how UCC filings protect creditors by securing interests in business property. Now let’s unpack the legal mechanics of priority, enforcement, and how real-world business events like bankruptcy or acquisition can impact your rights as a secured party.

Who Gets Paid First? Understanding Priority

In a default situation, the UCC provides a clear general rule: First to perfect, first in line. That means the creditor who files first (and correctly) will have top priority among secured parties.

However, there’s a key exception: Purchase Money Security Interests (PMSIs). If the PMSI holder properly files and notifies other creditors before the debtor takes possession of the collateral, they can jump ahead in the priority line-even if others filed earlier.

Enforcement of Security Interests

Once a debtor defaults, a creditor’s rights are triggered. Here’s how enforcement works under Article 9:

• Notice and Surrender: The creditor must notify the debtor and seek voluntary surrender of the collateral.
• No “Breach of Peace”: Repossession must be peaceful. If the debtor refuses, the creditor must pursue judicial remedies.
• Sale of Collateral: Once in possession, the creditor may sell the collateral to recoup the owed balance, in accordance with UCC requirements for commercial reasonableness.

What Happens in Bankruptcy?

If the debtor files for bankruptcy, having a perfected UCC-1 ensures secured creditor status-but that doesn’t mean full recovery is guaranteed. If the value of the collateral is depleted or prior creditors exceed the available equity, you may still end up unsecured.

Subordinations: When You’re Asked to Step Aside

Sometimes a third-party creditor (often a bank) will request a subordination agreement. This means you agree to place your security interest behind theirs, allowing them to take priority. While this may help the debtor access additional capital and keep operations running, reviewing the terms carefully and reassessing your collateral’s status is critical.

Assignments, Amendments, and Business Changes

Mergers and acquisitions complicate collateral rights. If Company A acquires Company B, UCC filings may remain enforceable-if the collateral description allows for successors and assigns. In these cases, the original filing date holds, maintaining your priority.

If your business changes names, locations, or undergoes restructuring, updating the UCC-1 through assignments or amendments is essential to avoid lapses in perfection.

Final Thoughts

For finance professionals, a strong understanding of UCC filings isn’t just a box to check-it’s a proactive step in managing credit risk. Whether you’re reviewing credit applications, extending financing, or considering subordination, a properly filed UCC-1 can protect your interests and prioritize your right to recovery.

At Wagner, Falconer & Judd, our team helps simplify the complexities of commercial lending. If your company is navigating secured transactions, we’re here to review your filings, draft enforceable agreements, and ensure your position is protected.

Ready to safeguard your assets? Contact us today. 

In the world of commercial finance, risk management is essential-and one of the most important tools available to creditors is the Uniform Commercial Code (UCC). If your organization extends credit or leases high-value equipment, understanding how to leverage the UCC can mean the difference between secured and unsecured recovery in a default situation.

What is the UCC?

The Uniform Commercial Code is a standardized set of laws governing commercial transactions in the United States. Article 9 of the UCC specifically addresses secured transactions, enabling lenders and sellers to file legal claims against the collateral that backs a loan or a line of credit.

At the heart of this process is the UCC-Financing Statement-a public filing (usually with the Secretary of State) that puts the world on notice: a creditor has a legal interest in the debtor’s property.

Types of UCC Filings

There are two primary types of UCC filings:

General (or Blanket) Filings: These cover all of a company’s assets, not just a specific item. banks often use blanket liens to secure lines of credit or loans, giving them the right to repossess a broad range of assets if a default occurs.

Specific Collateral Filings: These narrowly define the collateral-such as inventory, accounts receiveable, or equipment. This approach is commonely used by vendors or leasing companies who want to secure interest in a particular asset or class of assets.

Within specific collateral filings, a Purchase Money Security Interest (PMSI) stands out. PMSIs allow the creditor to leapfrog others in terms of priority, provided certain requirements are met, including early notification and timely filing.

Getting it Right: Filing Procedures

To perfect a security interest and maintain priority, a creditor must:

1. Obtain a signed security agreement– This could be part of a credit application, a promissory note, or a stand-alone document.
2. File a UCC with the correct information:
   • Full legal name and address of the debtor
   • Creditor’s name and address
   • Precise description of the collateral (e.g., “Debtor’s inventory…now owned or hereafter acquired…”)
3. Monitor expiration dates: UCC-1 filings are active for 5 years and require a continuation statement within 6 months of expiration.

Stay tuned for Part Two, where we’ll walk through priority disputes, enforcement in default, bankruptcy implications, and what happens when businesses merge or reorganize.

For financial professionals, securing payment starts long before an invoice becomes overdue. Implementing proactive lien and bond protections can mean the difference between getting paid or writing off a loss. Here’s how you can set yourself up for success and avoid unnecessary risks.

Start with Strong Documentation

To file a lien or bond claim effectively, you need a solid foundation of documentation. Missing even one critical piece of information can cause delays or jeopardize your rights. Key documents include:

Contract: Defines the scope of work, payment terms, and lien rights.

Job Level Tracking: Ensures accurate documentation of labor and materials.

 Credit Supplement Sheet: Verifies financial details and customer information.

Notices: Preserve lien rights and establish compliance with state laws.

Invoices & Proof of Delivery: Confirm amounts owed and that materials were delivered to the job site.

Understand State-Specific Lien and Bond Requirements

Lien laws vary by state, and missing deadlines or filing incorrectly can cost you your claim. For example:

Utah: A preliminary notice must be filed within 20 days of first furnishing or lien rights are waived.

Missouri: A 10-day Notice of Intent must be served before filing a lien. If your attorney receives the lien request too late, you may lose your rights.

Being aware of state-specific requirements ensures you never miss a deadline.

Verify Ownership and Delivery Details

A lien is only as strong as the accuracy of your filings. Make sure:

The correct property owner is listed-incorrect ownership details can invalidate your lien.

You have proof of delivery to the site, not just a customer’s warehouse or rigger’s yard.

Work Within Key Deadlines

Timing is everything when filing liens and bond claims. To avoid last-minute rushes:

• Request supporting documentation from brances at least 20 days before the deadline. 
• Engage WFJ for lien/bond assistance at least 14 days prior to the deadline. 

Get Expert Guidance

When in doubt, consult a legal expert. WFJ’s lien and bond attorneys are here to help answer your questions and ensure your filings are compliant. Whether you need an opinion letter or help navigating complex lien laws, our team is ready to assist.

Don’t Wait Until It’s Too Late

By establishing proactive lien and bond protections now, you can prevent financial losses and ensure that your company is paid for the work and materials it provides. Contact WFJ today to discuss how we can help you streamline your process and secure your receivables.