The process for filing a mechanics lien differs in every state. Generally, it starts with serving the required preliminary notices. Once payment issues arise, you record a mechanics lien in the clerk’s office in the county where the property is located.
In Massachusetts, recording a mechanics lien is slightly different — it is a two-step process that includes filing two separate documents. One of these documents is called Statement of Account. As with most lien-related documents, filing a Statement of Account requires following strict rules and regulations.
This guide walks you through the basics of a Massachusetts Statement of Account. Subcontractors and material suppliers with no direct contract with a property owner must know how to file this document as it is vital in making sure they recover their payments from delinquent clients.
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- What is a Massachusetts Statement of Account?
- Who must file a Statement of Account in Massachusetts?
- When to file a Statement of Account in Massachusetts
- Consequences of not filing a Statement of Account in Massachusetts
- How to file a Statement of Account in Massachusetts
- Best practices when filing a Statement of Account
What is a Massachusetts Statement of Account?
A Statement of Account is a document that you must file to protect and enforce your lien rights in Massachusetts. It is a record of the “just and true account” of the amount that you must be paid for your work on a project, including the credits due to you. Generally, it also includes prior payments that you have received, as well as the disputed claims that you are yet to receive.
Who must file a Statement of Account in Massachusetts?
A Statement of Account must be filed by any party who is looking to record a mechanics lien in Massachusetts. Contractors, subcontractors, and material suppliers must file a Statement of Account in Massachusetts if they want to exercise their lien rights and recover their unpaid payments via a mechanics lien.
When to file a Statement of Account in Massachusetts
Subcontractors must file a Statement of Account after a Notice of Subcontract has been filed. The specific deadline is the earliest date that applies to you among the three options below:
Remember that the Statement of Account is the second of two steps: you must first file a Notice of Subcontract before filing a Statement of Account.
Consequences of not filing a Statement of Account in Massachusetts
Failing to file a Statement of Account means that you did not comply with the statutory requirements of filing a valid mechanics lien in Massachusetts. Always keep in mind that filing a Massachusetts mechanics lien is a two-step process: file a Notice of Subcontract, then file a Statement of Account.
If you do not comply with the second requirement, then your Notice of Subcontract is considered null and void. It is, therefore, very important that you record a Statement of Account properly and on time. Otherwise, you effectively lose your right to claim your payment for a specific project via a mechanics lien.
How to file a Statement of Account in Massachusetts
1. Prepare the Massachusetts Statement of Account form
There is no statutory form for a Massachusetts Statement of Account. However, it must include the following information:
- a just and true account of the amount due to the claimant
- a brief description of the property
- the names of the property owners set forth in the Notice of Subcontract
Additionally, you may include your full name and address as well as the description of services that you provided. These details are technically not required, but it is best practice to include them for the sake of completion and clarity.
The “just and true account” of the amount due to you must be reasonable and preferably based on your written contract with your general contractor. The statement of account generally includes the following breakdown:
- contract amount
- change order amounts
- previous payments received
- disputed payments
- other credits due to you
- the total balance you are claiming
Note that these amounts must be reasonable and true, which implies that you may not inflate the amount for the sake of recovering more money from the owners. Stick to the contract amounts and make sure that you have the paperwork to back up your claim.
Also, note that the Statement of Account in Massachusetts does not have to be notarized prior to filing.
2. File the Statement of Account
When your Statement of Account is all ready for recording, you must now record it in the same county clerk’s office where the Notice of Subcontract was filed. This is the same clerk’s office where the project property is located.
Remember that there are three deadlines associated with filing a Statement of Account, but you are required to beat the earliest of the three dates:
- 90 days after a Notice of Substantial Completion is filed
- 120 days after a Notice of termination is filed
- 120 days after the last day of furnishing of labor or materials
Also, note that filing a Statement of Account means paying the appropriate filing fees. You may walk into your local registry to file the Statement of Account in person, or you may also mail your document to the clerk’s office. Call the clerk’s office beforehand to know how much it costs to file a Statement of Account. The exact amount must be included in your mail.
Best practices when filing a Statement of Account
1. Organize and keep track of all your financial records
To complete a Statement of Account, your books — including all your invoices and purchase orders — must be organized. It is also a good idea to have a schedule of values to make sure that your payments align with the contract schedule, especially if you are working on a big project.
When your payment records are organized, preparing a Statement of Account should be straightforward as you know exactly the remaining payment balance that you are yet to receive.
2. Prepare the Statement of Account early
Once a payment issue has arisen, you should be working on preparing your mechanics lien documents. Even though you are expected to file a Statement of Account after filing a Notice of Subcontract, you can start preparing your Statement of Account as you complete your Notice of Subcontract. Doing so will help you ensure that you record the Statement of Account on time.
Remember that it is important not only to include all the required details in your Massachusetts Statement of Account but also to file it on time, within the applicable deadline.
3. Remember to enforce your mechanics lien if you do not get paid
Most of the time, filing a Massachusetts mechanics lien should be sufficient to get you paid. In some cases, however, you may not receive the full payment that you have duly worked hard for. If this is the case, you must remember to enforce your mechanics lien by filing a foreclosure lawsuit.
You have 90 days within the day of filing your Statement of Account to initiate a foreclosure lawsuit. If your lawsuit is successful, then you will be able to recover your payment from the foreclosure sale of the property.