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Alan Cohen

Mechanics Lien Can Be Used Cumulatively with Other Debt Recovery Tools by an Experienced Construction Litigation Attorney

Do you operate in the construction industry in Massachusetts?

Are you finding it difficult to tally the financials on paper with payments received in actual because of the increasing accounts receivable turnover?

Is the property owner or general contractor delaying in making timely payments?

Whether you’re a supplier or a contractor, if you’re struggling to collect your long due payments for the services or raw materials that you have provided to a construction project, our attorney can help you get your monies back. With over 3 decades of experience in Massachusetts law industry and a proven record of helping numerous clients with successful debt recovery in the construction industry, our debt collection attorney Alan M. Cohen can assist you too.

By using our experience and knowledge to your advantage, we will use the best debt collection techniques cumulatively to prosecute your claims aggressively in conformance with the law to maximize collection of your bad debt.

Some of the many debt recovery tools that our experienced construction litigation attorney may use include the following:

  • Mechanics Lien

According to the Massachusetts construction industry laws, a mechanics lien is a statutorily-created lien against real estate. The purpose of this legal debt recovery tool is to secure the person’s right to payments for materials supplied or services rendered to a construction property project.The creation, perfection and enforcement of mechanics lien are governed in Massachusetts by M.G.L. c. 254, and strict conformance with the procedural rules is mandated by the court.

Mechanics lien can be obtained by the following parties:

  • Parties that are involved in the repair, removal, alteration or erection of a building, or any other type of improvement to real estate,
  • Parties providing raw materials, rental equipment, or appliances,
  • Parties rendering services to the construction project,
  • Design professionals also granted right to lien such as licensed land surveyors and landscape architects and engineers.

Our construction litigation attorney can file a mechanics lien on your behalf. Mechanics lien claims are quite effective at getting claimants paid quickly. Here are some of the reasons why mechanics lien works so effectively:

  • It Encumbers the Real Estate or Interest in Real Estate

Upon filing of a mechanics lien, the document is recorded with the land records. This means that it appears in the title search of the property thus it can’t be refinanced, sold or transferred to any other party until the mechanics lien claim is addressed which often means paid.

  • Gets the Attention of the Property Owner Instantly

A mechanics lien is perhaps the best way to get the attention of the proper owner who otherwise may not know, or care for that matter, whether subcontractors or suppliers are paid.

  • Helps Set a Strict Deadline

This tool is effective as it truly helps expedite the payment collection process by setting up a strict deadline for claim resolution. If your deadline is missed and claim isn’t paid, then the litigation begins. And let’s just say nobody likes litigation.

  • Enables You to Collect Payments from the Property

Once you file a mechanics lien, you can rest at ease that either way you will get paid. If for instance the debtor (property owner or general contractor) fails to pay you, then as per the law you have the authority to collect your payments due from the property. In other words, real estate can be sold to pay a claim. The most useful aspect of a mechanics lien is that it can allow suppliers, sub-contractor and sub-subcontracts to attach the land of an owner with whom you do not have a contract—all without the requirement of pre-approval of the court. As to general contractors, the ability to attach the property of the owner in a construction dispute without pre-judicial approval is huge as courts are often reluctant to attach property if there is any type of dispute as to the merits of the case. We all know that there is almost always a dispute raised by the property owner in a construction matter.

  • It Can Initiate a Breach

A construction project has a number of contracts interlinked or related to each other. For example, the property owner has a contract with the prime or general contractor, and the prime or general contractor with the subcontractor and so forth. Some of these project contracts have a provision that obligates the party to keep the real estate clear and free from liens. So, once a mechanics lien is placed on the project, these contract provisions may put one party in breach thereby putting pressure on the breaching party to resolve the lien immediately, without any delay, or post a bond. The beauty of a bond is that when you win, the bonding company must pay, and you don’t have to sell the property to get paid thereby saving big in legal fees, auctioneer fees, sale expenses and equally important, time.

  • Freezes the Flow of Money

As money is exchanged across various tiers of construction project parties, getting paid in a timely manner is not easy. However, if the property owner continues to delay debt payment for no apparent reason, then filing a mechanics lien is necessary. As soon as you file a mechanics lien, the flow of money in some circumstances freezes until the claim is paid. It escalates the debt collection efforts.

Many suppliers and subcontractors often forgo their right to filing a mechanics lien because they think that it won’t be possible if they don’t have a single written contract. But that’s not true! The good news is that the mechanics lien law in Massachusetts was revised and, in some ways, liberalized in 1997, which now gives parties seeking debt recovery the right to file even if they don’t have a formal written contract. All that you need to do is have written and/or electronic correspondence via email or otherwise which together form an offer and acceptance (terms would also be nice!!) which is regarded by law as a written contract. So, if you have that then our attorneys can start preparing the mechanics lien, provided that you have not blown the rigid time frame for filing a mechanics lien.

However, to get started our experienced construction litigation attorney will first carefully and closely review your case to see if you are eligible by law to practice the right of filing a mechanics lien. If our attorney thinks that you can file a mechanics lien, then we’ll prepare the necessary documents on your behalf needed to file the case. These include a notice of contract and statement of account and where indicated, a notice of identification.

Here it is important for you (the creditor and claimant) to understand that the construction project property can act as collateral or security to recover your debts. This means that you can’t immediately sell off the property at the auction to recover debt. Don’t confuse it with an immediate foreclosure proceeding. It is simply an action taken in conformance with the law to claim the project jobsite or property as security for debt collection if and when the debtor intentionally or unintentionally fails to pay for the services rendered or materials supplied within the scope of the mechanics lien law.

Even if you have blown the mechanic’s lien deadlines, you should not give up. Other means exist to get at monies owed by the property owner to the general contractor. Call Alan M. Cohen to learn how at (508) 620- 6900.

Now let’s suppose a few situations where our experienced construction litigation attorney may have to use other debt recovery tools cumulatively with a mechanics lien to help you recover your debt in full.

Debt Recovery Tools that Can Be Used Cumulatively with a Mechanics Lien

  • Keeper Attachment

Let’s assume that the property owner fails to pay the debt even when you’ve filed a mechanics lien, and that the debt is more than the sales price of the property kept as collateral. In such a situation, you don’t have to settle for less. Our attorney will use other debt collection tools to seek to recover the full amount of your long due payments.

Alan M. Cohen in such a scenario may use keeper attachment tool with a mechanics lien. Attachments can be best described as a statutory remedy available at a creditor’s disposal in Massachusetts that allows them to seize a debtor’s asset at the commencement of a lawsuit with or without notice.

Keeper attachment in particular is highly effective in such cases where the debtor is operating a cash business. It empowers the deputy sheriff to seize the money as soon as it comes to the debtor’s business. So, if your debtor’s business is also engaged in retail activity then using this tool, our attorney may work to recover your delinquent debt

  • Bank Attachment

Likewise, another means of collecting debt in full is using the power of bank attachment. Bank attachment can be used on ex-parte (without notification) basis too. This is an effective strategy if the debtor (property owner or general contractor) refuses to make timely and full debt payment; and wrongly disputes your requisitions.

In this situation a bank attachment is a good collection strategy in combination with a mechanics lien.  This attachment allows the creditor to freeze the debtor’s bank account so that they can’t withdraw money.

We advise you to always keep copies of checks received for three important reasons which are:

  1. Helps with account verification,
  2. Indicates continuous banking changes, and
  3. Affords the collection attorney attachment targets.

All this information is much needed to file a motion for a bank attachment and freeze the debtor’s account. It will put you in a strong position and ensure that the monies are held aside by the bank to pay you, the creditor after you have won the case.

  • Reach and Apply Injunction

Sometimes your debtor may claim that they can’t pay off the amount of debt in full or in a timely manner because their monies are stuck with other parties. Well, it can be true to some extend as a variety of parties are involved in a construction property project however, that doesn’t mean that you’ll have to wait for months or years until they receive money from their debtors and then decide to pay you (if they have any intentions to do so).

A reach and apply injunction can be used to supplement the security provided by the mechanic’s lien statute. A mechanics’ lien is limited to the amount that the property was improved. It does not secure interest, costs and reasonable attorneys fees. It does not secure other debt that the general contractor may owe to you from other projects.

However, if the property owner owes or will owe the general contractor in excess of that secured by a mechanics lien, the reach and apply injunction when properly used by our experienced construction attorney, can scoop up the difference and get you paid. This debt recovery tool is excellent when it comes to collecting money from third parties involved. Reach and Apply Injunction will allow our lawyer to enforce debt recovery judgments indirectly but strategically suing 3rd party that owes money to your debtor. Put simply, it cuts off your debtor from the loop and you get to recover your delinquent debt from your debtor’s debtor. By using this tool, our attorney will interact and deal with the third party directly and make sure that they pay you the money that they owe to your debtor.

  • Supplementary Process

Once you have a judgment, our attorney can also advice you to commence a new lawsuit that solely focuses on collecting debt payment. This is also known as a supplementary process. In the supplementary process, the judgment debtor must serve to the summons. In other words, the judgment debtor must appear in the court and submit themselves to an examination under oath that is relative to their assets and ability to pay. This process is also quite helpful when it comes to recovering debt from the debtor in the construction industry.

Contact us today For Case Evaluation

Reach out to the Law Offices of Alan M. Cohen LLC today. Call on (508) 620-6900 or email us at acohen@collections-law.comto schedule for initial consultation and case evaluation. Discuss your case with our experienced construction litigation attorney and we’ll provide you with quality guidance and step by step assistance making sure that your rights are protected and debt recovery happens in full and successfully. Our attorneys use a variety of debt collection tools strategically and cumulatively according to the case to ensure that debt payments are recovered smoothly and in a timely manner.

Give us the opportunity to serve you.

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