The first thing I think about when a subcontractor or supplier hasn’t been paid on a job is whether a mechanic lien can be filed. On private construction projects, subcontractors (or sub-subcontractors) and suppliers can assert a mechanic’s lien against the property where the project took place to secure payment for labor or materials supplied to that project. (Not familiar with mechanic’s liens? Review my earlier post on the basics of Massachusetts’ mechanic’s lien law). The filing of a mechanic’s lien will typically get the owner of the project and the general contractor paying attention to you and your unpaid bills, which can make it an effective tool to get you paid. However, there are strict filing requirements for mechanic’s liens and circumstances where a mechanic’s lien will not result in payment. Here is what a subcontractor or supplier needs to know about Massachusetts mechanic’s liens.
Keep track of what project you are working on. A mechanic’s lien is limited to the value of services performed or materials supplied to that particular project. Know the address of the project and keep track of what services or materials were provided. This is more difficult for suppliers, but without knowing what project your materials were used on, you cannot assert a lien against a particular project. How do you get this information? Ask each time you take a new order.
Keep track of the progress of the entire project. Since mechanic’s liens can be initiated up to ninety (90) days after the last date work was performed by any contractor on the project, know the status of the project. Subcontractors or suppliers involved in the initial steps of a project can still assert a mechanic’s lien up to ninety (90) days after the last work is done by the final contractors. Stay in touch with other subcontractors on the job or drive by to see the status of the project. If you don’t know the status of the project, use your own last date for performing services or supplying materials so you know that you will not run late on the filing deadlines.
Know your deadlines. The law requires strict compliance with the statutory mechanic’s lien deadlines. If you miss any one of them, your lien will be invalid.
- A Notice of Contract must be filed within ninety (90) days from the last date work was performed on the project, by any contractor or material supplier. (The deadline for recording the Notice of Contract is accelerated if a Notice of Substantial Completion or Notice of Termination is recorded against the project, although those are uncommon.)
- The Statement of Account shall be recorded within one hundred and twenty (120) days from the last date work was performed on the project. (Again, the deadline is accelerated upon the recording of a Notice of Substantial Completion or Notice of Termination.)
- Within ninety (90) days of recording the Statement of Account, a lawsuit must be filed against the property owner to enforce the mechanic’s lien.
Don’t wait. Although you can initiate a mechanic’s lien up to ninety (90) days after the last work is done on the project, don’t wait until then. The value of a mechanic’s lien is limited to the amount due or to come due to the contractor above you at the time you initiate the lien. If you wait to file the Notice of Contract until the last possible day, the contractor above you may have already been paid in full. Or, by the time you file the Notice of Contract, the contractor above you may have incurred so many offsets and charge backs for problems with its work that no more money is due to that contractor. If that has occurred, the value of your mechanic’s lien will be $0. The mechanic’s lien law specifically allows parties to file a Notice of Contract immediately after signing the contract. For parties that do, they are able to assert a lien for the full value of their unpaid invoices.
Send a Notice of Identification. A sub-subcontractor or lower tier supplier can further protect themselves from non-payment by sending the general contractor a Notice of Identification within thirty (30) days of starting work on the project. This alerts the general contractor (with whom the sub-subcontractor does not have a direct contract) that the party is working on the project and the estimated value of its work. If a Notice of Identification is sent, the mechanic’s lien will not be limited in value by the amount due or to become due to the contractor above them. Instead, sending a Notice of Identification will allow a sub-subcontractor or lower tier supplier to assert the full value of their mechanic’s lien, regardless of what has already been paid to the contractor above them.
Carefully review any lien waivers. A good general contractor or subcontractor will require the parties they contract with (and pay) to complete lien waivers. Carefully review the language of any lien waivers, especially partial lien waivers, to verify that the information in the lien waiver is accurate and you are not releasing claims for which you have not been paid.
Keep in mind that a mechanic’s lien is a good tool to assist you in getting paid but is not always a quick solution to the problem of nonpayment. However, practically, a mechanic’s lien makes another party (owner or general contractor) interested in getting your debt paid which can get your unpaid invoice the attention it needs to get resolved. Keep these tips in mind to maximize your ability to recover full payment for your work on a private construction project.
The mechanic’s lien process is complex and running afoul of the lien statute’s requirements is all too easy. For questions or assistance with Massachusetts mechanic’s liens, contact Jessica Murphy at (508) 791-8500 or another member of Mirick O’Connell’s experienced Construction Group.