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.