Just as a coin has two sides, so has a dispute between a property owner and a contractor who has supplied construction services to that owner. Let’s just tease that sentence out before explaining what rights in Massachusetts law both contractors and owners have when attempting to resolve a construction dispute.
When building work is carried out for a private owner (individual or company), the various parties involved in working on the project expect to receive payment for work completed as specified in any contract signed by both parties prior to initiation of construction work. What can contractors do if the owner of the building for whom the work has been carried out refuses to pay up, delays payment or only pays less than what was agreed? They can hardly remove all the building materials once they have been used in building work. They could refuse to do any work, but that doesn’t really help as they still haven’t been paid for what they have already done.
Explaining the role of the mechanic’s lien
The answer is a state law (Mass. General Laws c.254) that allows all parties who haven’t been paid for work completed under contract terms to take a lien on the property. This has to be done under exacting conditions (see below) and by itself doesn’t guarantee that the owner will pay up. However, like other types of liens, this so-called mechanic’s lien (a misnomer, if ever there was one, as it has nothing to do with mechanics or machines, but to do with construction) can prevent the owner of the building selling the building or even securing any extra loans for the building, or even precipitate the sale of the property so that the outstanding payment can be retrieved.
Conditions which must be met to take out a valid lien in Massachusetts
Contractors who wish to take out a lien on an owner’s property because they haven’t been paid must do so under the following conditions:
- Lien must relate to unpaid work or supplies provided under a written contract signed in agreement by both parties;
- Lien cannot be taken out on a public property;
- Lien must be accompanied by statement showing name and address of property owner, details of work completed or services or supplies provided;
- Lien must be filed within 90 days of last work done on the property or last services or supplies provided in case of a service provider or supplier;
- Lien must initially be filed with the county court or registry of deeds where the deed(s) of the property are stored;
- Lawsuit must be filed in the Superior Court within 90 days of the filing of the lien if payment has not been made.
Note that time limits vary from one state to another. These time limits are specifically for Massachusetts.
Also note that the lien filed by a contractor who has not followed the correct procedure as indicated above may be contested by the property owner. If a lawsuit is not filed within the 90 day limit the lien is automatically dissolved.
The rights of the property owner in Massachusetts
Property owners who have been involved in dealing with construction contractors, including sub-contractors, suppliers of materials, architects and engineers must understand that the threat of a lien is a real one. The existence of a lien may mean that without payment being made, the contractor could feasibly force the sale of the property in order to secure the amount owed. But what happens if the property owner genuinely believes that the contractor hasn’t fulfilled their side of the contract satisfactorily. Perhaps they didn’t actually complete what they were supposed to do, or the job they did, or the supplies provided were shoddy? It makes sense to withhold payment until the contractual agreement is satisfied.
The property owner’s best strategy is to avoid having to contest a lien once it has been filed. Attention to the way the contract was set out and supervision of all construction work as it was carried out may allow for disputes to be resolved in advance of a breakdown in a relationship.
Failing that, and assuming that the property owner has a genuine grievance, it pays to get a lawyer to examine the lien process very carefully. Any conditions that haven’t been made correctly under the state’s mechanic’s lien statute may prevent the lien from having any validity.
An attorney may also be able to arrange a settlement of any grievance through direct negotiation with the parties in dispute, including mediation. Evidence should be made available which establishes just why the owner has refused to make payment, e.g. failure to carry work out at a satisfactory standard.
While contractors have the existing state legislation on their side, the property owner disputing the reason for the lien also has an advantage: no contractors will want to go to court with all the extra expense involved in a lawsuit if the dispute can be resolved out of court. Lawsuits, if they drag on, can be enormously expensive for both parties.
If all else fails and there is no resolution of the dispute through negotiation or mediation and the contractor has fulfilled all conditions prior to filing a lawsuit to recover payment, you will need to have an experienced attorney on hand to help you contest the lien in court.
For more information, visit our website Mucci Legal or contact us for a free legal consultation today.