Payment issues and disputes are quite common in the construction industry. When faced with a payment concern, the best way to recover your due compensation is to file a mechanics lien.
A mechanics lien is a record of unsettled payment that gets attached to a property’s books. This information can be searched by potential buyers and financiers, so having a mechanics lien recorded against a property essentially limits the property’s market value. Owners are therefore encouraged to settle outstanding debts just to get rid of a mechanics lien on their property.
While a mechanics lien is your best weapon against delinquent clients, filing a valid mechanics lien is no easy task. There are strict rules and regulations to follow, and the validity of your claim relies on your compliance with these requirements.
This guide explains the basic steps in recording a valid mechanics lien in Massachusetts. Be aware that the lien rules in Massachusetts are a little different from other of other states, so make sure that you familiarize yourself with these requirements in order to file an enforceable mechanics lien.
- Who can file a mechanics lien in Massachusetts?
- Preliminary notice in Massachusetts
- How to file a Massachusetts mechanics lien
- Important deadlines in filing a Massachusetts mechanics lien
- Best practices when filing a Massachusetts mechanics lien
Who can file a mechanics lien in Massachusetts?
All construction parties who have contributed to the construction or improvement of a property may file a mechanics lien in Massachusetts. This includes general contractors, subcontractors, sub-subcontractors, and material suppliers.
Design professionals such as architects and consultants also have lien rights in Massachusetts.
Preliminary notice in Massachusetts
A preliminary notice, called Notice of Identification in Massachusetts, is required in the state. This notice is required for all parties who have no direct contractual relationship with the general contractor. The purpose of the Notice of Identification is to inform the general contractor of your participation in the project.
Parties that must serve the Notice of Identification include sub-subcontractors and suppliers to subcontractors. If the party who hired you is neither the property owner nor the general contractor, you have to serve the Notice of Identification to ensure full coverage for your lien rights.
What happens if you fail to serve the Notice of Identification in Massachusetts?
You still retain your lien rights, even if you don’t serve the Notice of Identification. However, the amount that you may recover through a mechanics lien will be limited to the amount that is yet to be paid to the party that hired you when you filed your lien.
Say, for example, that you’re a sub-subcontractor and your subcontractor still owes you $10,000 worth of payment. If the general contractor only owes your subcontractor $5,000, you may only file a mechanics lien for the remaining $5,000.
You will therefore not be allowed to secure the full $10,000 balance because the implication is that the higher-tier parties have already done their part of releasing the due payment. Make sure that you serve the general contractor a Notice of Identification to have full protection of your lien rights.
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When must you serve the Notice of Identification?
The Notice of Identification must be served within the first 30 days of your first day of work, which corresponds to the first day you started furnishing materials or rendering labor to a project.
How to file a Massachusetts mechanics lien
1. Prepare the Notice of Contract form
In Massachusetts, the mechanics lien is also known as a Notice of Contract. Whether you’re a general contractor, a subcontractor, a sub-subcontractor, or a materials supplier, your Massachusetts mechanics lien form must contain the following information:
- Your name and address
- The name and address of the party that hired you
- A description of the property location
- Contract price
- Agreed change orders (if applicable)
- Pending change orders (if applicable)
- Disputed claims (must indicate whether addition or subtraction)
- Payments received
Massachusetts state laws require the Notice of Contract to be in the following form for subcontractors:
Notice of Contract (Subcontractor)
and in the following for general contractors:
Notice of Contract (General Contractor)
Must a Massachusetts mechanics lien be notarized?
No, a Notice of Contract or Subcontract in Massachusetts does not have to be notarized.
2. Record the mechanics lien in the county clerk’s office
Once you have prepared your Massachusetts mechanics lien form, you now have to file it in the county clerk’s office in the county where the property is located.
The Notice of Contract must be recorded no later than 90 days after your last of furnishing labor or materials to a project. Be aware that if non-obligatory notices such as Notice of Termination or Notice of Substantial Completion have been filed, your deadline gets shortened to 60 days after such notices have been recorded.
3. Serve a copy of the mechanics lien to the property owner, if required
Parties who do not have a direct contractual relationship with the property owner must serve a copy of the recorded Notice of Contract or Subcontract on the property owners. Service of this notice may be done via registered or certified mail with return receipt requested.
There are no specific deadlines by which you must serve the copy. It is best practice to serve the copy as soon as they have been recorded. It is also highly advised that you serve a copy of the recorded mechanics lien even if you are not required to do so.
4. File a Statement of Account in the county clerk’s office
After having your Notice of Contract or Subcontract recorded, you have to file another document called Statement of Account. The Statement of Account must include the following pieces of information, based on Section 8 of Massachusetts lien statutes:
- a just and true account of the amount due to the claimant
- a brief description of the property
- the names of the owners set forth in the Notice of Contract
The Statement of Account must be filed no later than the earliest date among the following:
- 90 days after a notice of substantial completion has been filed
- 120 days after a notice of termination has been filed
- 120 days after the last day of furnishing of labor or materials
5. Enforce/Release the mechanics lien
A Massachusetts mechanics lien expires in 90 days after filing your Statement of Account. When a mechanics lien expires, it loses its hold over a property and it may no longer be enforceable.
This implies that if you do not receive your payment and your Notice of Contract is about to expire, you must enforce your mechanics lien by initiating a foreclosure action. You have to initiate a full-fledged foreclosure lawsuit a property and recover payment from the sale of the property, if you win the case.
If, on the other hand, you were able to recover your due compensation within the 90-day period, you are encouraged to release or cancel the mechanics lien by filing a cancellation in the local clerk’s office. This step is not mandatory in Massachusetts but it is considered a good business practice to do so.
Important deadlines in filing a Massachusetts mechanics lien
Best practices when filing a Massachusetts mechanics lien
1. Record the required mechanics lien documents promptly
There are two important lien-related forms that you must record in Massachusetts: the Notice of Contract or Subcontract, which corresponds to the actual mechanics lien, and the Statement of Account, which is part of filing a valid mechanics lien. These forms must be recorded promptly.
Do not wait until the last minute to prepare your forms and file your documents. This exposes you to the risks of making mistakes in your forms, and the state of Massachusetts requires utmost accuracy in the details that you include in your mechanics lien.
2. Ensure accuracy in the information included in your Massachusetts mechanics lien forms
Including an accurate property description sufficient for identifying the project location is very important in Massachusetts. While the law does not explicitly require a legal property description, you are encouraged to do research so you have the most accurate property description in your lien forms.
Other information must also be written and spelled correctly, including the legal name of your business (always include the correct suffix, e.g. Ltd. and Inc.). Keep in mind that you are not allowed to include attorney fees and other miscellaneous costs in your claimed amount, so stick to the value that’s related to the work that you performed.
3. Serve a copy of the mechanics lien to the property owner, even if not required
Only parties who do not have a direct contract with the property owners are required to serve on them a copy of the recorded Notice of Contract. However, you are still advised to serve the owners a copy of your mechanics lien even if you are not required to do so.
Notifying the property owners of a filed mechanics lien against their property may nudge them into taking action right away, so going the extra mile by doing this step may do you more good than harm.