Mechanic’s Liens Provide Great Leverage For Creditors

By Howard Goldman

mechanics

Mechanic’s liens are a powerful, effective, and efficient tool for creditors.  Unlike mortgages and other real estate encumbrances, mechanic’s liens are involuntary.  This means that a mechanic’s lien does not require court approval before it is perfected.  Accordingly, creditors can put a cloud on the title of real estate where their work, material, or services were provided, without having to first navigate expensive and time-consuming court processes.

Using the Massachusetts mechanic’s lien Statute, M.G.L. c. 254 (“Statute”), contractors, laborers, and suppliers can recover the cost of improvements made to real estate through a foreclosure sale of the subject real estate.  This foreclosure power provides great leverage for the creditor, and in turn provides compelling incentive for debtors to pay their outstanding bills.

However, strict compliance with the procedural rules for the creation, and ongoing enforcement, of a mechanic’s lien is mandated by both the Statute and the courts. [Read more…]

Mechanic’s Lien and Judicial Order to Freeze Insurance Proceeds Yields Excellent Recovery for Emergency Contractor

Recovered excellent mediation settlement for home improvement contractor who performed significant emergency tear-down and removal work of home destroyed by fire. The home was under-insured and heavily encumbered by mortgages, putting client at substantial risk of receiving little to no payment. Upon receiving case, we immediately investigated title and filed a Mechanic’s Lien under M.G.L 254 with the Essex Registry of Deeds, to secure the debt and prevent a sale or transfer of the subject property. We conducted a thorough investigation, contacting the property insurer and public adjuster for the homeowner to get a clear picture of available means to satisfy the debt. We further leveraged the client’s position by quickly filing a Verified Complaint with counts for Breach of Contract, Quantum Meruit, and Mechanic’s Lien. We additionally filed a Motion to Form a Constructive Trust on a Short Order of Notice, ultimately obtaining an order from Essex Superior Court to freeze the remaining insurance proceeds pending resolution of the case. With a lien in place and the insurance proceeds frozen, we had a very favorable position and proceeded to mediation, where the Defendant agreed to pay 95% of the amount invoiced.