1.1                          A bill for an act 
  1.2             relating to commerce; regulating lien or claim waivers 
  1.3             and subcontractor payments in building and 
  1.4             construction contracts; modifying the redemption 
  1.5             period for property sold at a mechanic's lien 
  1.6             foreclosure sale; amending Minnesota Statutes 1996, 
  1.7             section 514.15; Minnesota Statutes 1997 Supplement, 
  1.8             section 337.10, subdivisions 2 and 3. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1997 Supplement, section 
  1.11  337.10, subdivision 2, is amended to read: 
  1.12     Subd. 2.  [WAIVER OF LIEN OR CLAIM.] Provisions contained 
  1.13  in, or executed in connection with, a building and construction 
  1.14  contract requiring a contractor, subcontractor, or material 
  1.15  supplier to waive the right to a mechanics lien or to a claim 
  1.16  against a payment bond before the person has been paid for the 
  1.17  labor or materials or both that the person furnished are void 
  1.18  and unenforceable.  This provision shall not affect the validity 
  1.19  of the lien a waiver as to any third party who detrimentally 
  1.20  relies upon the lien waiver. 
  1.21     Sec. 2.  Minnesota Statutes 1997 Supplement, section 
  1.22  337.10, subdivision 3, is amended to read: 
  1.23     Subd. 3.  [PROMPT PAYMENT TO SUBCONTRACTORS.] A building 
  1.24  and construction contract must shall be deemed to require the 
  1.25  prime contractor and all subcontractors to promptly pay any 
  1.26  subcontractor or material supplier contract within ten days of 
  1.27  the prime contractor's receipt by the party responsible for 
  2.1   payment of payment from the owner or owner's agent for 
  2.2   undisputed services provided by the subcontractor party 
  2.3   requesting payment.  The contract must shall be deemed to 
  2.4   require the prime contractor party responsible for payment to 
  2.5   pay interest of 1-1/2 percent per month to the subcontractor 
  2.6   party requesting payment on any undisputed amount not paid on 
  2.7   time to the subcontractor.  The minimum monthly interest penalty 
  2.8   payment for an unpaid balance of $100 or more is $10.  For an 
  2.9   unpaid balance of less than $100, the prime contractor party 
  2.10  responsible for payment shall pay the actual penalty due to 
  2.11  the subcontractor.  A subcontractor party requesting payment.  A 
  2.12  party requesting payment who prevails in a civil action to 
  2.13  collect interest penalties from a prime contractor party 
  2.14  responsible for payment must be awarded its costs and 
  2.15  disbursements, including attorney fees incurred in bringing the 
  2.16  action.  This subdivision does not apply to construction of or 
  2.17  improvements to residential real estate as defined in section 
  2.18  326.83, subdivision 17, or to construction of or improvements to 
  2.19  attached single-family dwellings, if those dwellings are used 
  2.20  for residential purposes and have fewer than 13 units per 
  2.21  structure. 
  2.22     Sec. 3.  Minnesota Statutes 1996, section 514.15, is 
  2.23  amended to read: 
  2.24     514.15 [JUDGMENT, SALE, REDEMPTION.] 
  2.25     The judgment shall direct a sale of the real estate or 
  2.26  other property for the satisfaction of all liens charged 
  2.27  thereon, and the manner of such sale, subject to the rights of 
  2.28  all persons which are paramount to such liens or any of them.  
  2.29  It shall require the officer making such sale to pay over and 
  2.30  distribute the proceeds of the sale, after deducting all lawful 
  2.31  charges and expenses, to and among the lienors to the amount of 
  2.32  their respective claims, if there is sufficient therefor; and if 
  2.33  there is not sufficient then to divide and distribute the same 
  2.34  among the several lienors in proportion to the amount due to 
  2.35  each, and without priority among themselves.  If the estate sold 
  2.36  be a leasehold having not more than two years to run, or be the 
  3.1   interest of a vendee under an executory contract of sale the 
  3.2   conditions whereof are to be performed within the same period, 
  3.3   no redemption shall be allowed; in all other cases the right of 
  3.4   redemption shall be the same as upon execution sales, except 
  3.5   that the period of redemption shall be six months from the date 
  3.6   the sale is confirmed by the court.  No sale shall be deemed 
  3.7   complete until reported to and confirmed by the court.  
  3.8      Sec. 4.  [EFFECTIVE DATES; APPLICATION.] 
  3.9      Section 2 is effective August 1, 1997, and applies to 
  3.10  construction contracts entered into on or after that date. 
  3.11     Section 3 is effective for sales for which the first 
  3.12  publication of the notice of sale occurs on or after August 1, 
  3.13  1998.