Often a source of confusion, the Massachusetts Mechanics Lien Statute, M.G.L. c.254, can serve as a sword or shield to a contractor's efforts to get paid for work they have executed. The statute is extremely unforgiving and precise. Accordingly, failure to adhere to the forms and deadlines outlined in the statue will yield an invalid lien and abundance of frustration. While the timing of notices and procedural nuances of the statue are beyond our discussion, it is my hope to give you a basic understanding of how the statue works, whom it aims to protect and how to better protect yourself as a homeowner.
Mechanic's liens are statutory "involuntary" liens. Meaning that the person filing the lien does not need Court approval to perfect and secure their lien. In simple terms, you secure your lien as long as you follow the procedure and deadlines outlined in the statute. Under M.G.L c.254, the party seeking the lien must have a written contract. Oral contacts will not allow a contractor or laborer to assert a mechanic's lien. As a practical matter both the contractor and homeowner should always reduce any work being performed to a contract form specifying the scope and terms.
The need for such a statute is obvious and its intentions are noble. If you hire a contractor to improve your property and he or she performs the work, they deserve payment. If you fail to pay your contractor, he or she has a cause of action against you and should be entitled to lien your property for the value of the service provided (interest and attorney fees are not typically included in the lien amount). If you still fail to pay, the person holding the lien can foreclose and sell the property at public auction to satisfy the debt. While an actual auction is rare, the threat tends to bring people to the table and secure payment.
Interestingly, M.G.L.c. 254 provides similar protections for subcontractors, laborers and suppliers to lien your property as well. In fact, anyone found to be "improving your real property" who has a written contract will likely get protection under the statue. This may include plumbers, landscapers, masons or service technicians. The provisions for subcontractors and suppliers, while justified, are problematic for the homeowner who has paid his general contractor only to find the general contractor did not pay suppliers and subcontractors. In that instance, a homeowner may find their property liened by such workers despite paying in full.
In order to better protect themselves, there are a few things a homeowner may wish to do. First, a homeowner can obtain a blanket bond that will substitute or stand in the place of the real property. Blanket bonds should be obtained and filed before any repairs or improvements occur.
Secondly, if your property has already been liened under M.G.L. c254, you may consider a target bond. The target bond serves as a substitute to the lien and the lien is effectively "bonded off." This can be especially useful if you need to refinance or clear title to the property. Of course a homeowner needs to be aware that in any scenario, if a contractor is ultimately paid from the bonds, the company issuing payment will almost certainly come back to the homeowner for reimbursement.
To better avoid these situations it makes sense to have a contract with your general contractor that provides for installment payments throughout the project and lists all subcontractors and suppliers which will be used. Before you make a scheduled payment to the general contractor, you can insist the general contractor and all subcontractors execute a lien waiver for the work completed. Your goal in doing this is to ensure the general contractor pays the subcontractors as scheduled and you avoid a lien from them. (Note: in Massachusetts it is illegal to require a contractor or subcontractor to sign a blanket lien waiver before they have done their work)
You will also want to keep close watch over the project in case the subcontractors change. Keep note of the people at the work site and who they work for because you will want them to execute lien waivers as phases of the job are complete
In spite of your diligence, if it does become necessary for a contractor to assert a lien under the statute, there are three basic steps that he or she must take. First, a "Notice of Contract" must be filed with the appropriate Registry of Deeds. This form has very strict outside time limits for recording and must contain a legal description of the property. Second, a "Statement of Account" itemizing the money owed must be filed with the appropriate Registry of Deeds. Once again you will find strict time limits dictating when this is required. Lastly, the contractor must file suit to foreclose on the lien within 90 days of the "Statement of Account" and file a certified copy of that complaint with the Registry within 30 days of the commencement of the action.
The outside time limits for recording these documents, along with notice requirements to the homeowner may differ depending upon numerous variables. As a crude guideline a contractor will usually have at least 90 days from when they last provided labor or materials to assert their lien but could find themselves with substantially more time. I would never recommend any contractor attempt this process without legal counsel. The statue can be very confusing and leaves no margin for error.
-Andrew R. Martignetti, Esq.
Information in the above article is for educational purposes only and does not create an attorney-client relationship. You should not construe this to be a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel.
