Montana Lien & Bond Claim Rights: What You Should Know
Furnishing to a construction project in Montana? Then you’ll certainly want to review today’s post! Let’s take a look at the notice, lien, bond claim and suit requirements in Montana.
Montana Mechanic’s Lien Rights
For those furnishing to a private commercial project, there is no required preliminary notice. If you are furnishing to a private residential project, get ready to serve a notice of right to claim a lien within 20 days from first furnishing and then record the notice of right to claim a lien within 5 business days from serving the notice upon the owner.
A notice may not be required for residential projects if you are contracted directly with the owner, if you are only providing labor or if the contract is related to a dwelling of five or more families.
Whether the project is commercial or residential, the mechanic’s lien should be filed within 90 days from last furnishing and within 90 days from the recording of the notice of completion. According to Montana’s statute, the following information must be included in the lien:
(a) the name and address of the person claiming the lien;
(b) a description of the real property against which the lien is claimed sufficient to identify it;
(c) the name of the contracting owner;
(d) the name and address of the party with whom the person claiming the lien contracted to furnish services or materials;
(e) a description of the services or materials provided;
(f) the amount unpaid for services or materials or, if no amount is fixed by the contract, a good faith estimate of the amount unpaid, designated as an estimate;
(g) (i) the date on which the services or materials were first furnished; and
(ii) the date on which the services or materials were last furnished; and
(h) a declaration that a notice of a right to claim a lien was given to the contracting owner or an explanation of why the notice was not required. 71-3-535
Should you need to enforce the mechanic’s lien, you must file suit within 2 years from the filing of the lien.
Montana statute does allow for the substitution of a bond for the mechanic’s lien. The property owner can file a payment bond if the bond is 1 ½ times the amount of the mechanic’s lien and if the bond includes the following condition:
“The bond must be conditioned that if the construction lien claimant is finally adjudged to be entitled to recover upon the claim upon which the construction lien is based, the principal or the principal’s sureties shall pay to the claimant the amount of the claimant’s judgment, together with any interest, costs, attorney fees, and other sums that the claimant would be entitled to recover upon the foreclosure of a construction lien against the principal.” 71-3-551
If the lien has been bonded off, suit to enforce a claim against the bond would be the same as if it were a lien. “The action must be commenced within the time allowed for the commencement of an action upon foreclosure of a lien, and the statute of limitations applicable to a lien foreclosure applies to an action upon the bond, as it would had a bond not been filed.” 71-3-553
Montana Bond Claim Rights
As a best practice, when furnishing to a public project in Montana, always attempt to obtain a copy of the payment bond from the public entity which contracted the project. Generally, in Montana, payment bonds are required for state or governmental contracts of $50,000 or more, and are generally required for school district general contracts of $7,500 or more.
There is a preliminary notice, and the notice should be served upon the prime contractor after first furnishing, but within 30 days from first furnishing. You may not need to serve the notice if you are contracted with the general contractor.
If you need to proceed with the bond claim, you should serve the claim upon the public entity within 90 days from completion and acceptance of the contract. Unfortunately, there is no statutory provision regarding suit to enforce the bond claim, so we recommend you file suit in accordance with the terms of the payment bond. Often, suit to enforce a bond claim is required within 1 year from last furnishing.
Bonus: Prompt Pay
Montana statute does address prompt payment. Ultimately, on private projects, the general contractor is to remit payment to its subcontractor(s) within 7 days after the contractor receives payment from the owner. You can review the statutory specifics here: 28-2-2103 Payment to Contractor and Subcontractor