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In this webinar, presented by SunRay Construction Solutions, and Jessica Murphy, Partner, Tarlow, Breed, Hart & Rodgers, P.C., we will provide a detailed breakdown of the critical steps contractors, subcontractors, and suppliers must take to protect their financial interests and ensure they get paid on time, all while remaining compliant with Massachusetts lien laws.
Understanding Your Contract
A solid, well-drafted contract lays the groundwork for securing payment. It serves as your legal safety net, offering clarity on roles, responsibilities, and expectations. Without it, navigating disputes or enforcing payment rights becomes significantly more challenging.
- Statutory Interest and Penalties: Massachusetts allows contractors to recover 12% statutory interest on unpaid balances. However, contracts can specify higher rates (e.g., 18% per year) or additional late fees. This highlights the importance of carefully outlining payment terms in your agreement.
- Identifying Parties Properly: Incorrect names or incomplete details can void agreements. Confirm the legal names and business structures (e.g., LLC, corporation, sole proprietorship) of all parties via the Massachusetts Secretary of State’s business database.
Key Components Every Contract Should Have
- Full Identification of Parties: Include complete names, entity types, and addresses of all involved parties.
- Signatures and Approvals: Ensure all parties sign the contract. Electronic signatures are valid, but they must be authenticated and traceable.
- Detailed Scope of Work: Clearly outline what the project covers, specifying deliverables, exclusions, and timelines.
- Payment Terms: Include specifics such as due dates, payment milestones, late fees, and the preferred payment method or location.
- Dispute Resolution Clause: Include provisions for mediation, arbitration, or litigation in case of disputes.
The Role of Demand Letters
If you encounter non-payment, sending a demand letter from an attorney is often the first step. It is a formal notification requesting payment, outlining the unpaid amounts, and warning of further legal action if payment is not made. This approach is cost-effective, often resolves disputes amicably, and demonstrates your intent to enforce your rights.
Mechanics Liens in Massachusetts: A Powerful Tool for Contractors
What is a Mechanics Lien?
A mechanics lien is a legal claim against a property to secure payment for services, labor, or materials provided. It acts as leverage for contractors and suppliers by preventing property owners from refinancing or selling their property until the lien is resolved.
Who Can File a Mechanics Lien?
Under Massachusetts law, anyone who provides labor, materials, or services that directly improve a property is eligible, including:
- General contractors
- Subcontractors
- Material suppliers
Steps to File a Mechanics Lien
Step 1 - Verify Your Eligibility
- Ensure you have a signed, enforceable contract.
- Confirm your role in the project and your direct relationship with the property owner or contractor.
Step 2 - Record a Notice of Contract
- File the notice within 90 days of your last date of work or material delivery.
- Provide specific project details, including property addresses and proof that materials were used on the project.
Step 3 - File a Statement of Account
- This document itemizes the unpaid amounts owed to you. It must be filed within 120 days of your last date of work.
Step 4- File a Lawsuit
- If payment is not resolved, initiate legal proceedings within 90 days of filing your Statement of Account. Failure to do so will invalidate your lien.
Bond Rights: Protection for Public Projects
What Are Bond Rights?
Since mechanics liens cannot be filed against public properties, bond claims provide an alternative for contractors and suppliers working on public jobs. Payment bonds are typically issued by the general contractor and guarantee that subcontractors and suppliers will be paid.
Steps to File a Bond Claim
Step 1 - Identify the Bonding Company
Request a copy of the payment bond from the project owner or general contractor.
Step 2 - Send a Preliminary Notice
Notify the project owner or contractor of unpaid amounts promptly, as many bonds require notice within 30 to 60 days of non-payment.
Step 3 - File a Formal Bond Claim
Submit your claim with detailed documentation, including invoices, delivery receipts, and your contract.
Avoiding Common Pitfalls
- Improper Documentation: Always collect signed delivery receipts, photos, or other evidence that materials were delivered and used for the project.
- Missed Deadlines: Failing to meet filing deadlines (90 or 120 days) can nullify your lien or bond rights.
- Failure to Notify Owners: If you’re a sub-subcontractor or supplier, notify the property owner and general contractor of your involvement early in the project to preserve your rights.
Common Questions Contractors Ask
What happens if I don’t have a signed contract?
Without a signed contract, you lose the ability to file a mechanics lien in Massachusetts. Always ensure your contracts are properly executed.
Can punch list work extend the lien filing deadline?
No. Minor repairs, punch list work, or warranty tasks do not qualify as the last date of substantial performance.
How can I prove materials were used on a specific project?
Maintain detailed delivery records, including signed slips, photographs, and invoices tied to the job site.
Can I file a lien and a bond claim for the same project?
Yes, if the project is private and has a payment bond. However, for public projects, only bond claims are allowed.
What if I miss the filing deadline?
Missing deadlines means losing your lien rights, leaving you to rely solely on contract claims, which may be harder to enforce.
