Mechanic’s Liens in Massachusetts – A Guide to Its Requirements and How It Works

 

I. Introduction

A mechanic’s lien is a statutorily created lien against real property, the purpose of which is to secure a person’s right to payment for services rendered and materials supplies in connection with the improvement of real estate.  The creation, perfection and enforcement of mechanic’s liens are governed in Massachusetts by M.G.L. c. 254.  The mechanic’s lien permits contractors, laborers, and suppliers to recover the cost of improvements made to real estate through a foreclosure sale. However, strict compliance with the procedural rules for the creation and on-going enforcement of a mechanic’s lien is mandated by the courts.

Unlike other many other types of encumbrances, a mechanic’s lien is an involuntary lien (i.e. as opposed to such encumbrances as a mortgage), that does not require court approval before it is perfected (i.e. as opposed to encumbrances such as an attachment). Accordingly, a mechanic’s lien can be a powerful tool for creditors which will allow them to put a cloud on the title of  real estate where their work, material, or services were provided.

  1. II. Written Contract/Or A Series of Documents Satisfying the Statute of Frauds

 

In order to be eligible to obtain a mechanic’s lien under M.G.L. c. 254, the party seeking the lien must have a written contract.  In Noreastco Door & Millwork, Inc. v. Vajradhatu of Massachusetts, Inc., 1999 Mass.Appp.Ct.Div. 239 (1999), the Court stated “The crucial element……….is the existence of a written contract, for without it the mechanic’s lien is unenforceable.”. M.G.L. c. 254 Sec. 2A defines a “written contract” as “any written contract enforceable under the laws of the Commonwealth”, including any writing enforceable under the Statute of Frauds. The Statute of Frauds requires that a memorandum memorializing an oral agreement contain three elements to render the contract enforceable: (1) the writing must indicate the existence of a contract, (2) it must be signed by the party to be charged, and (3) it must indicate the quantity of goods involved. M.G.L. c. 106 Sec. 2-201. See; Waltham Truck Equipment Corp. v. Massachusetts Equipment Co., 7 Mass. App.Ct. 580, 582, 389 N.E.2d 753 (1979)(three writings in evidence signed by an authorized agent, when read together, satisfied the Statute of Frauds). The writings or series of writings taken together, must contain the essential terms of a contract, such as price, quantity, and type of materials and services. See; Cf. Harris v. Moynihan Lumber of  Beverly, Inc., 1999 Mass.App.Div. 113 (1999)(finding that a series of detailed documents, taken together, constituted a contract for the purpose of the statute).

III.       Who can obtain a Mechanic’s Lien In Massachusetts

The mechanic’s lien law has been in existence in Massachusetts since the 1800’s, but it was substantially overhauled in 1997. The revised statute grants statutory rights to:

–         parties involved in the erection, alteration, repair or removal of a building, structure or other improvement to real property;

–         parties furnishing material or rental equipment, appliances or equipment; and

–         parties providing construction management and general contractor services;

The present version of the Mechanic’s lien law is broad in scope and is not restricted to work or materials furnished with regard to work on a building or structure. Accordingly, in theory, a mechanic’s liens can be sought by any person who provide an “improvement to real property” such persons as landscapers, driveway installers, fence installers, and utility contractors. This is a growing area of law and whether something is an improvement to real property is open to interpretation as it was in these cases:

–         the transportation of a transformer from Connecticut to a nuclear power station in Massachusetts and setting it on a storage pad was not an improvement to real property and therefore the mechanic’s lien was dissolved;

Mammoet USA, Inc. v. Energy Nuclear Generation Co.,  16 Mass.L.Rep. 133; 2003 Mass. Super Lexis 1119 (2003);

–    mechanic’s lien does not cover the value of a contractor’s property, tools, etc. which was damaged or not returned on a construction site. John Marini Management Company v. Joseph G. Butler, trustee in bankruptcy, 70 Mass.App.Ct. 142, 873 N.E.2d 1150 (2007);

General contractors can seek liens under M.G.L. c. 254 Sec. 2 while subcontractors seek liens under M.G.L. c. 254 Sec. 4.

IV.       Perfection of Mechanic’s Liens

A lien under M.G.L. c. 254 Sections 2 and 4 is dissolved unless the person claiming the lien shall record a statement signed under the penalties of perjury giving an account of the amounts due to them. The notice of contract must be recorded not later than the earliest of:

–                     60 days after filing or recording a notice of completion;

–                     90 days after filing or recording of a notice of termination;

–                     90 days after the contractor, subcontractor, or supplier last performed labor or provided materials.

See; M.G.L. c. 254 Sections. 2 and 4.

In addition to filing the notice of contract, one must serve the Notice of Contract upon the owner to create a mechanic’s lien. See; Ouellet v. Armstrong, 18 MassL.Rep, 100 (2004)(failure to provide actual notice of the recording of the notice of contract is fatal to a mechanic’s lien claim).

M.G.L. c. 254 Sec. 8 provided that a contractor’s, subcontractor’s or supplier’s lien will be dissolved unless the party claiming the lien records the sworn statement of account not later than the earliest of:

–                     90 days after filing or recording a notice of completion;

–                     120 days after filing or recording of a notice of termination;

–                     120 days after the contractor, subcontractor, or supplier last performed labor or provided materials.

See; M.G.L. c. 254 Sec. 8.

After the statement of account is recorded, the general contractor must file a civil action in the appropriate county within 90 days of filing the statement of account and record the complaint in the registry in the county in which the land is located. See; M.G.L. c. 254 Sections 5 and 11.

  1. V. Summary Procedure To Dissolve The Mechanic’s Lien

The mechanic’s lien law provides a summary procedure in the Superior Court or District Court to discharge a lien. In particular, M.G.L. c. 254 Sec. 15A provides, in material part, that an action can be brought by any person in interest that claims:

“(a) that any person who has provided labor or materials or has agreed to provide funding, financing or payment for labor or materials, refuses to continue to provide such funding, financing or payment of labor or materials solely  because of the filing or recording of a notice of contract pursuant to section two or a statement of claim referencing a lien under section one, or (b) it appears from the notice of contract or a statement of account that the claimant has no valid lien by reason of the character of, or the contract for, the labor or materials or rental equipment, appliances, or tools furnished for which a lien is claimed, or (c) that a notice or other instrument has not been filed in accordance with  the applicable provisions of this chapter,  or (d) that for any other reason a claimed lien is invalid by reason of failure to comply with the provisions of this chapter, or (e) that an party’s rights are foreclosed by a judgment or release, or (e) that any party wrongfully refuses to execute a notice of completion….or improperly files or records a notice of termination……”

Massachusetts Courts have noted, however, that “summary discharge of the lien can only be obtained for defects that will customarily appear of record or be readily ascertainable by reference to undisputed documents……” Golden v. General Builders Supply, LLC,  441 Mass. 652, 656 (2004).

  1. VI. Voluntary Dissolution of a Mechanic’s Lien

 

A person who placed a mechanic’s lien on real estate may dissolve it by filing a notice of dissolution at the registry of deeds in accordance with M.G.L. c. 254 Sec. 10. It should be noted, however, that the filing of a notice of dissolution does not prevent the contractor, subcontractor, or material man from  recording another later filed notice of contract and statement of account with regard to work covered in the same contract. See; TremontTower Condo, LLC v. George B.H. Macomber Co., 436 Mass. 667 (2002).

VI.       Dissolution of Lien by Bond

There are two type of lien bonds provided for under M.G.L. c. 254. The first type of bond is known as a “blanket bond” pursuant to M.G.L. c. 254, Section 12 which provides that  any person may record a bond in the form provided by statute and after recording the bond “no lien under this chapter shall thereafter attach in favor of any person entitled to the benefit of such bond and not names as a principal thereof for labor or for labor and materials performed under the contract in respect to which such bond is given.”  A blanket bond may be recorded before the start of work.

The second type of bond is a so-called “target bond” pursuant to M.G.L. c. 254 Sec. 14.  With a target bond, the property owner may dissolve the lien by obtaining a surety bond “in a penal sum equal to the amount of the lien sought to be dissolved conditioned for the payment of any such sum which the claimant may recover on his claim for labor or labor and materials. M.G.L. c. 254, Sec. 14. To be effective, after recording, a notice of recording and a copy of the bond must be served upon the claimant. M.G.L. c. 254 Sec. 14. Upon receiving actual notice service of the notice of recording and a copy of the bond, the claimant has 90 days to file suit against the surety, otherwise its lien is dissolved.

  1. VII. Execution of Lien Waivers

 

A contract requiring a general contractor or general contractor not to file a mechanic’s lien is unenforceable pursuant to M.G.L. c. 254 Sec. 32. A contractor or general contractor may, however, release a portion of its lien in exchange for payment. M.G.L. c. 254 Sec. 32 provides for a statutory form for general contractors. No statutory form exists for subcontractors, but they can still execute partial lien waivers which have been enforced by Massachusetts Courts. See; Buchanan Electric, Inc. v. Tocci Building Corp., 2000 Mass.Super Lexis 291.  The statutory lien waiver form under M.G.L. c. 254 Sec. 32 waives all rights through the date of payment except for retainage, unpaid agreed or pending change orders and disputed claims, and subordinates the general contractor’s lien rights to the lender, to the extent of money actually advanced as of the date of execution of the lien waiver.

VIII.    CONCLUSION

The Massachusetts mechanic’s lien process is purely a creature of statute. While it provides a powerful tool for persons seeking payment for their securities in improving real estate, one seeking to enforce the mechanic’s lien must strictly comply with the statute requirements.

The Greater Boston Massachusetts lawyers at Goldman & Pease LLC concentrate in business law, real estate law, condo law, civil litigation, and estate planning and serve the greater Boston metro region including Alston, Arlington, Belmont, Brighton, Brookline, Cambridge, Canton, Dedham, Dover, Milton, Natick, Needham, Newton, Norwood, Waltham, Watertown, Wayland, Wellesley, Weston, West Roxbury, Westwood, and all of Massachusetts.