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What is the procedure to protect our ability to file a mechanics lien for nonpayment? Customer is a HOMEBUILDER.

We understand the notice requirements where we are the Prime, and where we act as a subcontractor. However, where we are working for a homebuilder, please advise the requirements. We are not sure how to notice the homeowner [where there the home is being constructed, and therefore, not sold]. However, if the builder sells the house while we are completing work, may be too late to file a lien as the new homeowner would have gained title, and possible loan without the lien coming up in a title search. Do we file the lien before construction starts? Then issue a release of lien?

1 reply

Jul 17, 2020

If you were hired by the party who owns the property, it'd probably be wise to observe all notice and lien requirements for direct contractors/prime contractors/GC's in Massachusetts. This is true regardless of whether that owner will reside there or will ultimately sell the property at some point. With that being said, following the subcontractor notice requirements might ease fears. Massachusetts subcontractors are generally required to send preliminary notices within 30 days of commencing work on the project. If you aren't a subcontractor at that point, it won't be required. Even if the property is sold within that initial 30 days, if you were hired by a party that owned the property at the time of hiring, then there's a fair argument that the notice still shouldn't be required. But, if it's causing anxiety, sending that notice anyway could cover all bases. What's more, notices will generally still be effective even if the property is sold before the completion of the project. Obviously, the purchaser will know that work is continuing at that project site, and if they allow work to continue as it was prior to to the sale, they'll be authorizing your continued participation on the project.

Property sales during the project

Mechanics liens are available to those who have improved property and gone unpaid for their work. If you haven't improved the property yet, then filing a mechanics lien will likely result in an invalid, unenforceable, and potentially even fraudulent lien claim. If you're going unpaid later on in the project, and if you believe the property will soon be sold, it'd be wise to file a mechanics lien claim before the sale, if you've decided to file a mechanics lien at that point. That could reduce potential complexities with the claim. Even if that lien won't make its way into the title search, having the lien attach to the property before the sale will preserve that claim for payment and the lien will be effective. Note that if you've filed a mechanics lien and notified the current owner of the property, they'll have a responsibility to inform a purchaser of the lien claim. Finally, if the property is sold during the project and you end up having to file a mechanics lien at some point after the sale - a lien should still be on the table. If a new owner takes over the property but allows construction to continue, they'll be authorizing the continuation of the work and assuming the liability associated with being an owner of an active construction site. Granted, it couldn't hurt to consult with a local Massachusetts attorney for some clarity on potential complexities. You can find a Massachusetts lawyer here: Find a Massachusetts Construction Lawyer.

Additional Massachusetts resources

For further discussion on Massachusetts notice and lien requirements, these articles will be useful: - Massachusetts Preliminary Notice Guide and FAQs - Massachusetts Mechanics Lien Guide and FAQs - How to File a Massachusetts Mechanics Lien – A Practical Guide

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