What Happens After I Record My Lien? - Webinar Massachusetts

In this webinar, presented by SunRay Construction Solutions and Jessica Murphy, Counsel, Tarlow, Breed, Hart & Rodger, we will walk you through the steps following the recording of a lien in Massachusetts, including contract requirements, additional documentation, lien enforcement, and best practices.

Checking Your Contract

Before enforcing a lien, verify that your contract meets Massachusetts requirements. Here are the various aspects of a contract that you should be extremely careful of.

1. Proper Identification of Parties

Ensure your contract correctly identifies all parties involved. If you don’t have a separate signed agreement, your credit application may serve as the contract. This is common in supply houses where purchase orders or work orders may not be formalized.

Subcontractors and general contractors typically have project-specific agreements, and some work under year-to-year contracts. Verifying whether a business is a sole proprietorship, corporation, or LLC is essential. You can confirm corporate status on the Massachusetts Secretary of State’s website.

For example, Dunkin’ Donuts stores are often independently owned, meaning payment ability varies by franchisee. Understanding ownership structure helps in assessing payment risks.

2. Detailed Scope of Work

Your contract must clearly define the scope of work. Suppliers have straightforward terms, but subcontractors need explicit service descriptions to avoid disputes.

3. Price Terms

Clearly state the cost and what the payment covers. Ambiguous pricing can make payment enforcement challenging.

4. Signatures

Massachusetts law requires a written, signed contract to file a mechanic's lien, known as a "Notice of Contract." The agreement only needs to be signed by the party being charged (your customer). If your credit application is signed solely by them, it is sufficient.

Verify the authority of the person signing, particularly in family-run businesses where unauthorized individuals may sign contracts.

Bonus Considerations

• Payment Terms: Clearly define terms such as Net 30.

• Interest & Fees: Massachusetts allows up to 12% interest for contract breaches, but higher rates must be in writing. Attorney fees are only recoverable if explicitly stated in the contract.

Additional Documentation for Notice of Contract

To file a Massachusetts Notice of Contract, gather the following:

• Project Location: Full street address and, if needed, a deed reference.

• Delivery Details: Signed delivery receipts or proof of delivery, as liens only apply to materials delivered to the property.

Securing and Enforcing Lien Rights

Identify the Property Owner

Determining property ownership can be complex. Lien services can assist with deed searches.

Follow Strict Deadlines

• Notice of Contract: Must be filed within 90 days of the last work date.

• Statement of Account: Must be filed within 120 days of the last work date.

• Lawsuit Deadline: Must be filed within 90 days of the Statement of Account.

A service like Sunray can help with preparing and recording the Notice of Contract and Statement of Account. After that, an attorney must file a lawsuit to enforce the lien.

Understanding Lien Limitations

Lien amounts are limited to the unpaid balance when the owner receives notice. Filing early helps ensure funds remain available. A best practice is implementing a policy requiring immediate lien filings for large contracts.

Traps for the Unwary in Massachusetts Notice of Contract

• Proving Material Use on the Property: Delivery tickets serve as key evidence.

• Avoid Waiting Until the Last Minute: Filing takes time, and delays can jeopardize lien rights.

• Bounced Payments: If a check bounces after the lien deadline passes, enforcement options may be lost. Wire transfers are more secure.

• Public Property & Condo Restrictions: Liens cannot be placed on public property or condominium common areas, but they can be placed on individual condo units.

Bond Rights as an Alternative to Liens

Public projects require bonds, and some private projects have them. If working with a condo association, request a bond upfront.

Bond Enforcement Steps

• Direct Contractors: May not need to provide notice.

• Subcontractors & Suppliers: Must give notice within 65 days of non-payment.

• Lawsuit Deadline: Typically one year from the balance due date.

Requesting a bond copy at the start of the project simplifies enforcement if needed.

The Right Way to Get Paid

Use Liens and Bond Claims Strategically

A properly recorded Notice of Contract and Statement of Account often encourages payment without litigation. In Massachusetts, if a valid lien exists and unpaid funds remain, the owner must pay.

Secure Payment Methods

• Certified Funds or Wire Transfers: Wire transfers are the safest option, as certified checks can be faked.

• Verify Wire Instructions: Always confirm payment details by speaking to a live representative to avoid fraud.

Review Release Terms Carefully

Massachusetts allows statutory lien waivers, but custom waivers may include broad release language. Ensure you are not waiving rights beyond the specific payment received. At project completion, consider mutual releases to prevent future claims.

Key Takeaway

Understanding what happens after filing a mechanics lien in Massachusetts is essential for protecting your payment rights. From contract verification to lien enforcement and alternative options like bonds, staying informed ensures you take the right steps. If you have questions about specific cases or deadlines, consulting an expert can help navigate the complexities of lien law effectively.

Common Questions on Mechanics Liens and Foreclosure in Massachusetts

1. If I am not paid after filing my lien, how long do I have to start the foreclosure process?

If you are not paid after filing your mechanics lien, you must initiate the foreclosure lawsuit within 90 days of recording the Statement of Account. The lawsuit will proceed like any other, typically including breach of contract claims alongside the lien claim.

2. Are there any documents required to be sent before filing a foreclosure suit?

Yes. To prove a mechanics lien claim, you need to demonstrate that:

• You provided materials or labor.

• You were not paid.

• The other party had an obligation to pay you.
  Additionally, you must show that materials were delivered to the project, typically through delivery receipts or similar documentation. These documents are essential for trial or summary judgment motions.

3. Are there any differences in deadlines or documents between residential and commercial projects?

No, the deadlines and documents required for mechanics liens apply equally to both residential and commercial projects. However, in residential projects, property owners may be less familiar with mechanics liens. Ensuring the Notice to Owner is properly sent and explaining the potential consequences (such as a property sale) can help encourage payment.

4. Does the timing of filing a lien affect its priority? What if there is a mortgage on the property?

Yes. In Massachusetts, lien priority follows the "first in time, first in right" rule. The earlier you record your Notice of Contract, the stronger your lien position. If you record early, you may be ahead of other lien claimants.

If a mortgage exists, it does not automatically have priority over a mechanics lien. Mortgage priority depends on its recording date. In some cases, mortgage lenders may subordinate their interests or clear a mechanics lien to prevent complications.

5. How often do properties actually get sold due to mechanics liens?

In practice, foreclosure through a mechanics lien is rare. It is a powerful legal tool that often pressures property owners or mortgage companies to settle the debt before reaching the point of sale. Many cases result in payment before a property is ever forced to be sold.