Mechanic’s Liens News Flash

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Mechanic’s Lien Newsflash
or
He Who Hesitates Is Lost

The “new and improved” Mechanic’s Lien in 1996 gave suppliers, contractors and rental equipment companies 90 days from the date that work was last performed to record a Notice of Contract. So you thought you could safely wait 90 days to record the lien to secure your money.

Think again.

On December 30, 2003, the SJC ruled that where the GC had abandoned the job and was terminated prior to the date the subcontractors recorded their lien and notified the owner, the subcontractors could not collect from the property owner using a timely filed mechanic’s liens. This case, Bloomsouth seems to stand for the proposition that where a general contractor defaults or abandons the job prior to substantial completion, the subcontrac­tors and suppliers bear the risk of loss, not the owner, unless the subcontractors previously recorded a Notice of Contract and previously notified the owner thereof.

The Court held that because the GC willfully by abandoned the project, it lost any rights it may have had to further payment from the owner.

So what can you do to protect yourself?

Timely and proper notice is key. Whether you are a general contractor, subcontractor or supplier, we strongly suggest that you record the Notice of Contract at the outset of the job and notify the owner thereof. This may help pro­tect you against the owner’s favorite defense: “We have already paid the GC in full so your lien is worthless.”

Do Mechanic Liens Allow You to Recover Interest and Attorneys’ Fees from the Property Owner?

On January 22, 2004, the SJC said no. Mechanic liens are now limited to labor and materials and do not include attorneys’ fees or interest. So, how do you more fully protect yourself from the financial impact of deadbeatitis?

Success Story # 1: A contractor ran up a large bill at a material supply house to the tune of almost $70,000.00. The contractor unfortunately could not carry that tune. My client called me. 

Upon careful review of the situation, I concluded that filing a mechanic’s lien was my client’s best and most economical bet for getting paid. I immediately obtained a copy of the deed to the property where the contractor had used my client’s materials to renovate an apartment building. Within days, I prepared the Notice of Contract and Statement of Account, two of the three steps necessary to create and enforce a mechanic’s lien. I then promptly sued to perfect the lien (step three).

The timing of the lien was perfect. The owner was selling the renovated apartments as condominiums. After intensive negotiations with the owner and the bank’s counsel, we agreed that my client would receive some of the sales proceeds from each unit in exchange for partial releases. Within forty days, my client received the full amount of its principal and interest.

Absent the mechanic’s lien, the only music my client would have heard was the “deadbeat shuffle.”

Although there is no fool proof way, we suggest foregoing the collection agency route. Immediately using an aggressive experienced commercial litigation attorney at the first sign of your customer’s financial distress may maximize your recovery and may allow you to get paid more and faster than your competitors.

If we can help you to protect your bottom line or if you have any other debt liens or questions about collecting your debts or would like us to prepare and/or record Notices of Contract and Statements of Contract, on a flat fee or hourly basis, please contact the firm at 800-794-1397 or by filling out the email form on this site.

 

The Law Offices of Alan M. Cohen LLC represents clients and sues debtors in Middlesex County, Boston, Bristol County, Suffolk County, Springfield, Hampden County, Norfolk County, Dedham, Plymouth County, Salem, Brockton, Essex County, Cambridge, Worcester, Worcester County, Barnstable County and throughout Massachusetts.