Minnesota Session Laws - 1998, Regular Session

                            CHAPTER 289-H.F.No. 2601 
                  An act relating to commerce; regulating lien or claim 
                  waivers and subcontractor payments in building and 
                  construction contracts; modifying the redemption 
                  period for property sold at a mechanic's lien 
                  foreclosure sale; amending Minnesota Statutes 1996, 
                  section 514.15; Minnesota Statutes 1997 Supplement, 
                  section 337.10, subdivisions 2 and 3. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1997 Supplement, section 
        337.10, subdivision 2, is amended to read: 
           Subd. 2.  [WAIVER OF LIEN OR CLAIM.] Provisions contained 
        in, or executed in connection with, a building and construction 
        contract requiring a contractor, subcontractor, or material 
        supplier to waive the right to a mechanics lien or to a claim 
        against a payment bond before the person has been paid for the 
        labor or materials or both that the person furnished are void 
        and unenforceable.  This provision shall not affect the validity 
        of the lien a waiver as to any third party who detrimentally 
        relies upon the lien waiver. 
           Sec. 2.  Minnesota Statutes 1997 Supplement, section 
        337.10, subdivision 3, is amended to read: 
           Subd. 3.  [PROMPT PAYMENT TO SUBCONTRACTORS.] A building 
        and construction contract must shall be deemed to require the 
        prime contractor and all subcontractors to promptly pay any 
        subcontractor or material supplier contract within ten days of 
        the prime contractor's receipt by the party responsible for 
        payment of payment from the owner or owner's agent for 
        undisputed services provided by the subcontractor party 
        requesting payment.  The contract must shall be deemed to 
        require the prime contractor party responsible for payment to 
        pay interest of 1-1/2 percent per month to the subcontractor 
        party requesting payment on any undisputed amount not paid on 
        time to the subcontractor.  The minimum monthly interest penalty 
        payment for an unpaid balance of $100 or more is $10.  For an 
        unpaid balance of less than $100, the prime contractor party 
        responsible for payment shall pay the actual penalty due to 
        the subcontractor.  A subcontractor party requesting payment.  A 
        party requesting payment who prevails in a civil action to 
        collect interest penalties from a prime contractor party 
        responsible for payment must be awarded its costs and 
        disbursements, including attorney fees incurred in bringing the 
        action.  This subdivision does not apply to construction of or 
        improvements to residential real estate as defined in section 
        326.83, subdivision 17, or to construction of or improvements to 
        attached single-family dwellings, if those dwellings are used 
        for residential purposes and have fewer than 13 units per 
        structure. 
           Sec. 3.  Minnesota Statutes 1996, section 514.15, is 
        amended to read: 
           514.15 [JUDGMENT, SALE, REDEMPTION.] 
           The judgment shall direct a sale of the real estate or 
        other property for the satisfaction of all liens charged 
        thereon, and the manner of such sale, subject to the rights of 
        all persons which are paramount to such liens or any of them.  
        It shall require the officer making such sale to pay over and 
        distribute the proceeds of the sale, after deducting all lawful 
        charges and expenses, to and among the lienors to the amount of 
        their respective claims, if there is sufficient therefor; and if 
        there is not sufficient then to divide and distribute the same 
        among the several lienors in proportion to the amount due to 
        each, and without priority among themselves.  If the estate sold 
        be a leasehold having not more than two years to run, or be the 
        interest of a vendee under an executory contract of sale the 
        conditions whereof are to be performed within the same period, 
        no redemption shall be allowed; in all other cases the right of 
        redemption shall be the same as upon execution sales, except 
        that the period of redemption shall be six months from the date 
        the sale is confirmed by the court.  No sale shall be deemed 
        complete until reported to and confirmed by the court.  
           Sec. 4.  [EFFECTIVE DATES; APPLICATION.] 
           Section 2 is effective retroactive to August 1, 1997, and 
        applies to construction contracts entered into on or after that 
        date. 
           Section 3 is effective for sales for which the first 
        publication of the notice of sale occurs on or after August 1, 
        1998. 
           Presented to the governor March 16, 1998 
           Signed by the governor March 18, 1998, 11:28 a.m.