A. THE MECHANIC'S LIEN LAW IS A STATUTE DESIGNED TO PROTECT CONTRACTORS AND SUPPLIERS. TO AVAIL YOURSELF OF ITS ADVANTAGES, HOWEVER, YOU NEED TO KNOW WHAT TO DO.
If you are a building contractor or supplier then you need to be familiar with the Massachusetts mechanic's lien law. It could be your best friend or your biggest nightmare depending on whether you know how to navigate your way through this somewhat cumbersome legal process. In essence, the title "mechanic's lien" is a misnomer as it has nothing to do with the rights of a mechanic or cars (which rights fall under the remedy of a "garagemen's lien"). Simply put, a mechanic's lien is a security that a contractor or supplier has for payment of labor or materials supplied to a private construction.
Massachusetts General Laws c.254 governs how mechanics' liens are to be initiated and later perfected by contractors or suppliers. The right can be asserted on either a residential or commercial project but does not attach to construction projects on public land. Typically, the very filing of a mechanics lien against a project will be enough to resolve a dispute.
The net effect of such a lien is once it is recorded a lending institution will pick it up before it makes a disbursement to the owner of the project. The lien often will have the effect of stopping the funding on a project until the lien is satisfied or removed. It must be remembered that the lien is quite often a contractor's or supplier's only immediate remedy to getting paid for work done or supplies provided and delivered.
A. Who is eligible to file a mechanic's lien?
The right to file a lien is open to almost anyone involved in a private construction project-the general contractor, subcontractors, second-tier subcontractors, laborers, and suppliers can all take advantage of the protection of the statute. The statute also provides protection for architects, engineers, construction managers, and those companies supplying rental equipment. However, any party who asserts a mechanic's lien MUST have a written contract in one form or another. The statute does not mandate the type of contract required.
B. How does a contractor file a mechanic's lien?
In Massachusetts, a mechanic's lien is initiated by the filing of a series of recordings in the local registry of deeds where the subject property of the project is located. Once those recordings are completed, it is followed by a lawsuit in Superior Court. The mechanic's lien law has strict timing and filing requirements that must be satisfied or the lien will be unenforceable.
1. In order to file a mechanic's lien, you must first record a Notice of Contract with the local registry of deeds. The Notice of Contract contains specific information about the project including the address the owner and parties to the written contract and the contract amount including original contract price, change orders, payments made and balance due. The Notice of Contract must also accurately identify the property to be liened. Quite often, this involves a sophisticated title search in order to ensure that the description provided is, in fact, an accurate description of the property.
Any small error in the description of the property on the notice of contract will result in the notice being filed on the wrong piece of property or rejected by the registry in the first instance. In both cases, what you thought you had an enforceable interest to protect your rights is now in serious jeopardy. It is for this reason, particularly when clients come to us with multiple pieces of property to lien, that we take the expense and time to farm this work out to our stable of title examiners so as to ensure the right result. All of our title examiners are properly insured for this type of work, as well.
2. The notice of contract must be recorded no later than 90 days from the date was last performed on the project or, in the case of suppliers, 90 days from the date of last delivery of goods to the project. The deadline for recording the Notice of Contract is accelerated if a notice of substantial completion or notice of termination is recorded against the project, but this is a rare exception to the rule. Once the Notice of Contract is recorded, the notice of the lien must be given to the owner of the property by statute.
If you fail to do this, your rights could be jeopardized. As a matter of course, the Katz Law Group takes the extra step of sending notice to the owner and or the general contractor and all other contracting parties by either overnight mail or by certified mail in order to ensure delivery and to go over and above the requirements of the statute.
3. In the case of a second-tier supplier or sub-subcontractor can protect themselves by sending the general contractor a Notice of Identification within 30 days of starting work on the project. This notice alerts the general contractor( with whom they have no contractual relationship) that there is a party working on the project and the estimated value of its work. For those businesses who either fall into the second tier status as either a subcontractor or supplier, I would highly recommend filing this notice.
You must never assume that the party you are working with or the party to whom you are supplying goods is keeping the general contractor aware of the multiplicity of parties working on any given project. If you do further work or provide supplies between the time you file the notice of identification and the point in time when you file your Notice of Contract you will not be limited by the amount in the Notice of Identification.
4. In connection with the Notice of Contract, you are required to record another document called a Statement of Account. It is somewhat similar to the Notice of Contract and provides an accounting, under oath, of the amount due at the time of recording. The Statement of Account must be recorded within 120 days from the last date that work was performed on the project. The best practice from our experience at the Katz Law Group is to file both the Notice of Contract and the Statement of Account at the same time. In this way, you only have one deadline to manage instead of having to comply with two separate deadlines.
5. Within ninety days of recording the Statement of Account and assuming your lien was not resolved, a lawsuit must be filed in court against the property owner to enforce the original mechanic's lien. A copy of the complaint initiating the lawsuit in the Superior Court is then recorded at the registry of deeds. In order to prevail on the initial mechanic's lien, the contractor or supplier must establish in the lawsuit that they are due money for their work and that they have satisfied each of the filing requirements of the mechanic's lien statute. Although a judgment on the lien will include an order for the sale of the property at the location of the project, liens will typically be resolved by either payment, a lien bond, or settlement prior to enforcement of a court order for the sale of the project property.
As you can see, there are a lot of moving pieces involved with the filing of a mechanic's lien in Massachusetts. It is important to note that each step of the mechanic's lien statute must be complied with or else your lien rights will fail. The results of your failure to comply with the statue will result in a loss of rights for your company. There are no exceptions in the event of non-compliance.
At the Katz Law Group, we have handled hundreds of mechanic's liens matters from the initial Notice of Contract up through and including a Superior Court lawsuit and trial. We know the hurdles that contractors and suppliers face in these situations and we are here to assist. By starting the process in a timely fashion, making sure that your cost itemizations are clear and being organized in your approach, you will be in a better position to recover the monies that are due to your company. Please call us at 508-480-8202 to find out how we can help you protect your rights.
The protection of your legal rights is our first priority.