Wednesday, December 06, 2006

The Mystery of the Mechanic's Lien

For some reason, mechanic's liens seem to be shrouded in mystery. Although contractors have the right to lien property for money owed, they frequently seem not to do it correctly, and lose their opportunity to have security for a debt.

The Massachusetts Continuing Legal Education book describes a mechanic's lien as follows:

"A mechanic's lien is a claim upon real estate to secure payment for work or labor performed on or materials furnished for buildings or other improvements. The labor or material must have been provided at the request of the owner of the real estate."

Under Massachusetts law, the creation of a lien occurs by recording a notice in the registry of deeds which must include a date by which the particular contract is to be completed. After creating a lien, the lienor must then record its statement containing the amount claimed due subject to "all just credits", and this statement must be filed within thirty days following the completion date previously set forth in the notice of lien. The claimant must file a civil action within sixty days after filing the statement, and failure to file such an action in a timely manner results in the dissolution of the lien.

The law itself states the following, "Such person may file or record the notice of contract at any time after execution of the written contract whether or not the date for performance stated in such written contract has passed and whether or not the work under such written contract has been performed, but not later than the earliest of: (i) sixty days after filing or recording of the notice of substantial completion under section two A; or (ii) ninety days after filing or recording of the notice of termination under section two B; or (iii) ninety days after such person or any person by, through or under him last performed or furnished labor or materials or both labor and materials."

It's no wonder that this is all confusing. Although contractors would be better off to leave the filing to attorneys, they should understand what the lien does for them. It gives them an interest in the property when their bills are not paid. The homeowner then either has to post a bond to dissolve the lien, or litigate or settle the case with the contractor if he or she wants to have clear title to refinance or convey the property. The contractor therefore has some leverage when attempting to get paid.

29 Comments:

At 6:40 PM, Anonymous Anonymous said...

The lumber yard claims that my contractor owes them a substantial amount of money for my home to be built. Their claim is that it has been owed since July 2006 it is now Dec. 2006. 5 days ago I received a certified letter stating a lien has been placed on my property. Before this I had no contact with the lumber yard nor any notification from them of any past due money. Shouldn't they have notified me earlier? How can they just file a lien without prior notification to me?

 
At 5:48 PM, Anonymous Anonymous said...

What about a contractor who has shoddy worksmanship? Seems to me the homeowner should be able to file a lien against the contractor if it can be demonstrated that the work was substandard.

 
At 12:05 PM, Blogger scole999 said...

Thanks for the information. I am in the middle of a construction project and this will help.

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Store

 
At 4:03 PM, Anonymous Anonymous said...

You should check out all the damage National Lumber has done abusing the Mechanics lien law. Continuing to extend credit to deadbeat contractors knowing the homeowner is a backstop is wrong. The law is not in place to help a supplier with bad business judgement.

 
At 4:51 PM, Blogger Bradley said...

My roofer's supplier just told me he was about to lien my property because the roofer hadn't paid him. Work was completed and contract was paid in full more than 90 days ago. Our state law says a lien notice must be issued no more than ninety days after the person has ceased to furnish materials.
The supplier argues that he was "invoiced" for some "additional materials" after the job-completion date. The job was done and there was nothing in my contract calling for "additional materials." Doesn't the 90-day lien window apply to supply/delivery/contract-completion and NOT "invoicing?"

 
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