Bill Summary – FastDemocracy

0760.01000
     Sixty-eighth
     Legislative Assembly                   HOUSE BILL NO. 1323
     of North Dakota
     Introduced by
       Representatives Cory, Grueneich, Koppelman, Louser, Roers Jones, Rohr
       Senators Kannianen, J. Roers
  A BILL for an Act to amend and reenact sections 35-27-01, 35-27-02, 35-27-03, 35-27-07,
  35-27-18, and 35-27-24 of the North Dakota Century Code, relating to a claimant's right to
  maintain a construction lien for furnishing materials and improvements.
  BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
      SECTION 1. AMENDMENT. Section 35-27-01 of the North Dakota Century Code is
  amended and reenacted as follows:
      35-27-01. Definitions.
      In this chapter, unless the context or subject matter otherwise requires:
      1.   "Contract" means any agreement for improving real property, written or unwritten,
          express or implied.
     2.   "Improve" means to build, erect, place, make, alter, remove, repair, or demolish any
          improvement upon, connected with, or beneath the surface of any land, or excavate
          any land, or furnish materials for any of suchthese purposes, or dig or construct any
          fences, wells, or drains upon suchthe improvement, or perform any labor or services
          upon suchthe improvement; or perform any architectural services, construction
          staking, engineering, land surveying, mapping, or soil testing upon or in connection
          with the improvement; or perform any labor or services or furnish any materials in
          laying upon the real estate or in the adjoining street or alley any pipes, wires, fences,
          curbs, gutters, paving, sewer pipes or conduit, or sidewalks, or in grading, seeding,
          sodding, or planting for landscaping purposes, or in equipping any such improvement
          with fixtures or permanent apparatus.
     3.   "Improvement" means any building, structure, erection, construction, alteration, repair,
          removal, demolition, excavation, landscaping, or any part thereof, existing, built,
          erected, improved, placed, made, or done on real estate for its permanent benefit.
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      4.   "Materials" means materials or fixtures whichthat are incorporated in the improvement
           and those which become normal wastage in construction operations, custom or
           specially fabricated materials for incorporation in the improvement, building materials
           used for construction, but not remaining in the improvement, subject to diminution by
           the salvage value of suchthe materials, tools, appliances, or machinery, excluding
           hand tools, used in the construction of the improvement to the extent of the
           reasonable value for the period of actual use. The rental value shallis not be
           determinable by the contract for rental unless the owner is a party theretoto the rental
           contract.
     5.   "Owner" means the legal or equitable owner and also every person for whose
          immediate use and benefit any building, erection, or improvement is made, having the
          capacity to contract, including guardians of minors or other persons, and including any
          agent, trustee, contractor, or subcontractor of such owner.
     6.   "Person" means every natural person, fiduciary, association, corporation, or limited
          liability company.
     7.   "Subcontractor" means all personsa person contributing any skill, labor, or materials to
          the improvement except such as have contracts therefor directlywhich does not have a
          direct contract with the owner; and, includes any person whothat enters into a contract
          with a subcontractor as above defined, for the performance of any part of suchthe
          subcontractor's contract.
    SECTION 2. AMENDMENT. Section 35-27-02 of the North Dakota Century Code is
 amended and reenacted as follows:
    35-27-02. Persons entitled to construction lien - Notice - Prohibition.
     1.   Any person that improves real estate, whether under a contract with the owner of
          suchthe real estate or under contract with any agent, trustee, contractor, or
          subcontractor of the owner, has a lien upon the improvement and upon the land on
          which the improvement is situated or to which the improvement may be removed for
          the price or value of suchthe contribution. Provided, however, that the
     2.   The amount of the lien is only forlimited to the difference between the price paid by the
          owner, trustee, or agent and the price or value of the contribution. If the owner, trustee,
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           or agent has paid the full price or value of the contribution, no lien is allowed. Provided
           further that if
      3.   If the owner, trustee, or an agent of the owner has received a valid waiver of lien,
           signed by the person that improves the real estate, a lien is not allowed.
      4.   Any person that extends credit or makes a contract with any agent, trustee, contractor,
           or subcontractor of the owner for the improvement of real estate, upon demand, has
           the right to request and secure evidence of the legal description of the real estate
           upon which the improvement is located, including the name of the title legal or
           equitable owner of the real estate. Written notice that a lien will be claimed must be
          given to the legal or equitable owner of the real estate by certified mail at least ten
          days before the recording of the construction lien.
    SECTION 3. AMENDMENT. Section 35-27-03 of the North Dakota Century Code is
 amended and reenacted as follows:
    35-27-03. When lien attaches.
     1.   As against the legal and equitable owner of the land, subject to section 35-27-02, such
          liens attach and take effect from the time the first item of material or labor is furnished
          upon the premises for the beginning of the improvement.
     2.   As against a bona fide purchaser, mortgagee, or encumbrancer without notice, noA
          lien may attach prior tomay not attach against a person that acquires an interest in real
          estate, in good-faith, without actual or constructive notice of the claimant's rights,
          before the actual and visible beginning of the improvement on the groundsubject
          property. Subject to the exception set forth
     3.   Except as provided in section 35-27-04, all such liens under this chapter are preferred
          to any unrecorded mortgage or other encumbrance not then of record, unless the
          lienholder had actual notice thereofof the unrecorded interest.
    SECTION 4. AMENDMENT. Section 35-27-07 of the North Dakota Century Code is
 amended and reenacted as follows:
    35-27-07. Title of vendor or consenting owner - Subject to liens.
     1.   When land is sold under an executory contract requiring the vendee to improve the
          sameland and such contract is forfeited or surrendered after liens have attached by
          reason of such improvements, the title of the vendor is subject thereto, but the vendor
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           is not personally liable if the contract was made in good faith. When improvements are
           made by one person upon the land of another, all persons interested therein
           otherwisein the land, other than as bona fide prior encumbrancers or lienors, are
           deemed to have authorized suchthe improvements, insofar as toand are subject their
           interests to the liens thereforattached to the real estate. Any person who has not
           authorized the same may protect the person's interest from such liens
      2.   A person may object to any unauthorized improvements by serving:
           a.    Serving upon the person doing work or otherwise contributing to such
                 improvementmaking the improvements, within five days after knowledge
                thereofof the improvements, written notice that the improvement is not being
                made at the person's instance,unauthorized; or by posting like
          b.    Posting a notice objecting to the unauthorized improvements, and keeping the
                samenotice posted, in a conspicuous place on the premises. As against a lessor
                no lien is given for repairs made by or at the instance of the lessor's lessee,
                unless the lessor has actual or constructive notice thereof and does not object
                thereto.
     3.   If the legal or equitable owner's tenant orders improvements on leased real estate, no
          lien is allowed unless the legal or equitable owner has actual or constructive notice of
          the improvements and fails to object to the improvements on the leased property.
     SECTION 5. AMENDMENT. Section 35-27-18 of the North Dakota Century Code is
 amended and reenacted as follows:
     35-27-18. Construction lien on railway contracts obtainable.
     Every person that furnishes any labor, skill, or material for constructing, altering, or repairing
 any line of railway, or any improvement or structure appertaining to any line of railway by virtue
 of any contract with the owner, or the owner's agent, contractor, or subcontractor authorized in
 writing to contract for the owner, has a lien upon suchthe line of railway and the right of way of
 suchthe railway, and upon all bridges, depots, offices, and other structures appertaining to the
 line of railway, and all franchises, privileges, and immunities granted to the legal or equitable
 owner of the line of railway for the construction and operation thereofof the railway, to secure
 the payment for the labor, skill, and materials, upon recording a lien, within ninety days from the
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  last day of the month in which the labor or material was furnished, but a failure to record within
  the ninety days does not defeat the lien except to the extent specified in section 35-27-14.
      SECTION 6. AMENDMENT. Section 35-27-24 of the North Dakota Century Code is
  amended and reenacted as follows:
      35-27-24. Action to enforce construction lien - Notice of - Deficiency judgment.
      Any person having a lien by virtue of this chapter may bring an action to enforce the lien in
  the district court of the county in which the property is situated. Any number of persons claiming
  liens against the same property may join in the action and when separate actions are
  commenced the court may consolidate the actions. Before a lienholder may enforce a lien, the
 lienholder shall give written notice of the lienholder's intention so to do, which notice must be
 given by personal service upon the recordlegal or equitable owner of the property affected at
 least ten days before an action to enforce the lien is commenced, or by registered mail directed
 to the owner's last-known address at least twenty days before the action is commenced. The
 judgment may direct that in the event thatif a deficiency remains after the sale of the real
 property subject to the lien an execution may issue for suchthe deficiency.
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Statutes affected: 
INTRODUCED: 35-27-01, 35-27-02, 35-27-03, 35-27-07, 35-27-18, 35-27-24
Enrollment: 35-27-01, 35-27-02, 35-27-03, 35-27-07, 35-27-18, 35-27-24