Is a construction lien waiver signed by our subcontractor enforceable in North Dakota, even one signed before payment?
Yes, on the statute's own words, regardless of when it is signed or whether payment has actually been made. N.D.C.C. § 35-27-02(3): "If the owner, trustee, or 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." Spier v. Power Concrete, Inc. dates that proviso rather than applying it. A footnote there sets out the section as it stood before 1 July 1979, with no waiver proviso in it at all, and then recites that "Section 35-27-02, NDCC, was amended in 1979 and the amended law, which became effective on 1 July 1979, reads as follows:" followed by the proviso in words the section still carries: "Provided further that if the owner or an agent of the owner has received a waiver of lien signed by the person who improves the real estate by the contribution of labor, skill, or materials, no lien shall be allowed." Spier itself decided a notice question on the rule that "[r]ights under a mechanic's lien are governed by the law in force at the time the right accrued." The decision that applies the proviso is Peterson Mechanical, Inc. v. Nereson: "A party entitled to a mechanic's lien may waive that right by a signed writing [NDCC 35-27-02; see NDCC 1-01-08; 1-02-28], or may be estopped to assert the mechanic's lien by acts or conduct constituting estoppel."
The trap
Unlike New Jersey's construction-lien-waiver statute, N.J.S.A. 2A:44A-38, which makes a waiver void unless given in consideration for payment and effective only to the extent payment is actually received, nothing in N.D.C.C. § 35-27-02's text conditions a waiver's effectiveness on consideration, on payment, or on timing; a signed waiver defeats the lien on its face whether it was signed before or after the work was done or paid for. Two things do qualify the statute's silence, and neither of them is consideration. The waiver has to be real: Peterson Mechanical states that "[a] waiver requires voluntary and intentional relinquishment of a known right or privilege," so a signature obtained from someone who did not know of the right is open to attack on that ground rather than for want of payment, and the same decision treats estoppel as a separate route to the same result. And N.D.C.C. § 1-02-28, which Peterson Mechanical cites for the power to waive at all, allows the benefit of a statute to "be waived by any party entitled thereto, unless such waiver would be against public policy." Whether a court would use that proviso to read a payment condition into § 35-27-02 is still unanswered. Two further limits in the same section have nothing to do with waiver: anyone extending credit to the owner's contractor must give the owner written notice "by certified mail at least ten days before the recording of the construction lien," and "[n]otwithstanding any provision in this section, any person that performs labor or furnishes materials or services under chapter 35-24 is prohibited from claiming or maintaining a lien under this chapter."
10 authorities
- statuteN.D.C.C. § 35-27-02enactment date not established
The words that state the rule
If the owner, trustee, or 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.
- statuteN.D.C.C. § 35-27-02enactment date not established
The words that state the rule
Any person that improves real estate under a contract with the owner of the 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 the contribution. - The amount of the lien is limited 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, or agent has paid the full price or value of the contribution, no lien is allowed.
The words that state the rule
Provided further that if the owner or an agent of the owner has received a waiver of lien signed by the person who improves the real estate by the contribution of labor, skill, or materials, no lien shall be allowed.
The words that state the rule
Section 35-27-02, NDCC, was amended in 1979 and the amended law, which became effective on 1 July 1979, reads as follows:
- statuteN.D.C.C. § 35-27-02enactment date not established
The words that state the rule
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 legal or equitable owner of the real estate. Written notice 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. - Notwithstanding any provision in this section, any person that performs labor or furnishes materials or services under chapter 35-24 is prohibited from claiming or maintaining a lien under this chapter.
- statuteN.D.C.C. § 1-02-28enactment date not established
The words that state the rule
Except when it is declared otherwise, the provisions of this code in respect to the rights and obligations of parties to contracts are subordinate to the intention of the parties, when ascertained in the manner prescribed by the chapter on the interpretation of contracts. The benefit thereof may be waived by any party entitled thereto, unless such waiver would be against public policy.
The words that state the rule
A party entitled to a mechanic’s lien may waive that right by a signed writing [NDCC 35-27-02; see NDCC 1-01-08; 1-02-28], or may be estopped to assert the mechanic’s lien by acts or conduct constituting estoppel.
The words that state the rule
A waiver requires voluntary and intentional relinquishment of a known right or privilege. Peterson v. Front Page, Inc., 462 N.W.2d 157 (N.D.1990).
The words that state the rule
A mechanic’s lien is purely a creature of statute, and the statutory requirements must be fairly met. Schaffer v. Smith, 113 N.W.2d 688 (N.D.1962). Rights under a mechanic’s lien are governed by the law in force at the time the right accrued.
The words that state the rule
At the time of Spiers’ contract with Dakota Building, § 35-27-02, NDCC, provided as follows: “Any person who improves real estate by the contribution of labor, skill, or materials under contract with the owner of such real estate shall have a lien upon the improvement, and upon the land on which it is situated or to which it may be removed, for the price or value of such contribution. Provided, however, that the amount of the lien shall only be for the difference between the price paid by the owner and the price or value of the contribution. If the owner has paid the full price or value of the contribution, no lien shall be allowed. No person shall have a lien for improving real estate resulting from extending credit to or making a contract with any agent, trustee, contractor, or subcontractor of such owner unless such person first notifies the owner in writing of the provisions of chapter 35-27
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.