Home » Articles » Constitutional Liens in Minnesota

 
 

Constitutional Liens in Minnesota

 
 

Constitutional Liens, one of the most misunderstood legal concepts in Minnesota Construction Law.

Because the name contains the word “lien,” people often believe a Constitutional Lien is just another, less formal way, to claim a lien for work performed on Real Property. However, what a Constitutional Lien actually is, is just an exception to Minnesota’s Homestead Exemption.

In Minnesota, a person’s homestead is for the most part exempt from execution by one’s creditors, even through bankruptcy. Exceptions are if the homeowner specifically grants a right to the creditor, for example a mortgage. Article I, §12 of Minnesota’s Constitution also makes an exception to the homestead exemption for debts from work performed to improve a homestead under contact with the homeowner.

The term “Constitutional Lien” does not create a lien on property, but rather allows someone who obtains a judgment based on a contract to ignore the homestead exemption if the underlying work was performed on the homestead. A Constitutional Lien is not near as good as a Mechanic’s Lien and should only be relied upon when a lien claimant fails to follow the statutory requirements to maintain their Mechanics’ Lien rights. Some of the main differences between Mechanics’ Liens and Constitutional Liens are:

        (1)     Priority.  A Mechanic’s Lien takes priority in the property from the first date visible work is performed on the project, while a Constitutional Lien does not encumber the property until the contractor or worker obtains a judgment against the homeowner and has the court specifically determine the work was an improvement to the home. Therefore, other liens or mortgages could be placed by the homeowner during this time frame or the homeowner could even sell the home prior to the contractor or worker obtaining a judgment.

        (2)     Costs, Interest and Attorney Fees.  The law giving a Constitutional Lien does not provide for court costs, interest or attorney fees, whereas those are granted to Mechanic’s Lien claimants.

        (3)     Subcontractors and Material Suppliers Excluded.  Only those in direct contract with the homeowner can normally obtain a judgment against the homeowner, and have the judgment excepted from the homestead exemption. Thus, subcontractors and material suppliers have to work through the general contractor to get any benefit from a Constitutional Lien.

Knowing what a Constitutional Lien is and how it can be used or defended against is another important factor in guiding people involved in the Construction Industry. Hopefully, the above brief explanation gives you the knowledge to know when to further investigate how Constitutional Liens can affect your rights. I am well versed in Constitutional Liens and would be happy to discuss your situation.

Brian W. Rude

Legal Counsel in the business of helping yours!

 

 

No Comments

  1. [...] Have you ever heard of a “Constitutional Lien?” If you wish to find out more about them you can read an Article I recently posted to my web site entitled, “Constitutional Liens, one of the most misunderstood legal concepts in Minnesota Construction … [...]

Post a Comment

You must be logged in to post a comment.