The Massachusetts Mechanic’s Lien Statute, Mass. G. L. c. 254, has notoriously strict deadlines by which notices of contract, statements of account, and certified complaints must be filed in relation to work performed on private property to “perfect” and enforce a lien. Failure to comply with the statutory recording requirements will almost certainly result in the discharge of the lien—and the loss of potentially significant leverage against a general contractor or landowner that has not paid for services or materials provided to improve the property.
In a recent case, a contractor learned the hard way just how strictly Massachusetts courts interpret the mechanic’s lien deadlines—and how one wrong move can cause a contractor’s lien to be discharged, even during a pandemic.
In 2018, Pacific Theatres Exhibition Corporation hired Graycor Construction Company Inc. to serve as the general contractor for the construction of a cinema complex on land owned by a different entity (Podium Owner, LP), and leased by yet another entity (Podium Developer LLC). The cinema land was to be part of a mixed-use project consisting of multiple parcels owned by several distinct entities. To complicate matters further, the contract between Pacific Theaters and Graycor misidentified the parcel where Graycor was working, instead referencing an abutting parcel unrelated to the project, and owned by yet another entity, Office Tower Owner, LP.
Graycor performed work and provided labor and materials on the project until March 4, 2020, when Graycor ceased work after it alleged Pacific owed over $3M that Pacific had refused to pay. On April 27, 2020, Graycor recorded a notice of contract and statement of account pursuant to Mass. G. L. c. 254, §2 and §8, the sections of the Statute applicable to general contractors.
Unbeknownst to Graycor, while it had timely recorded its notice of contract with the registry of deeds, the notice of contract named the wrong owners of the property (who had leased it to the developer) and instead named Office Tower Owner, LP, the owner of the abutting parcel. Graycor then took steps to enforce its (unknowingly defective) lien by filing suit against Office Tower Owner, LP.
On September 9, 2020, 189 days after the last day of work and after it filed its lawsuit, Graycor realized its error and recorded a proper notice of contract naming the actual owners (the Podium defendants) with the registry of deeds. Grayor similarly amended its complaint naming the Podium defendants – the actual owners. By this time, however, it was outside of the statutory deadlines for recording the notice of contract.
The Podium defendants moved to dismiss the complaint and brought a complaint for summary discharge of the lien under G.L. c. 254, §15A, the statutory mechanism used to discharge or dissolve a defective lien. The now-correctly named property owners argued Graycor had recorded its corrected notice of contract too late. The Podium defendants argued that because Graycor had not filed its notice of contract identifying the true owners and property’s address timely (i.e., ninety days or fewer from when work was last performed on the property), the lien was defective and should be discharged.
In a clever bit of argument, Graycor moved to dismiss the Section 15A complaint for discharge of the lien, arguing that the filing deadlines had been tolled following a string of emergency orders by the state’s highest court, the Supreme Judicial Court, in the wake of the Covid-19 pandemic. The SJC order upon which Graycor based its argument was a May 26, 2020 order that provided:
“[u]nless otherwise ordered by the applicable appellate court, court department, or judge(s) presiding over the court case, all deadlines set forth in statutes or court rules, standing orders, tracking orders, or guidelines that expired or will expire at any time from March 17, 2020, through June 30, 2020, are tolled until July 1, 2020.”
Greycor argued that where the SJC’s May 26, 2020 emergency order tolled the statutory period for “all deadlines set forth in statutes”, including the lien deadlines established by Mass. G. L. c. 254, the order applied to notices of contract deadlines under c. 254 and, accordingly, those deadlines had been extended. Graycor claimed that its corrected and re-recorded notice of contract was timely recorded –and that it was entitled to a second bite at the apple, notwithstanding the fact that it was recorded outside of the statutorily prescribed timelines.
The trial court agreed with Graycor that the SJC’s emergency orders extended the lien deadlines and ruled in Graycor’s favor. The Podium defendants appealed.
The SJC, however, reversed the trial court’s ruling and agreed with the Podium defendants that Graycor’s corrected notice of contract was defective because it had been recorded outside of the mechanic’s lien statutory period. The SJC explained that its emergency orders for the pandemic were to be narrowly applied as guidance to lower courts on how to operate safely during the pandemic—and not to executive agencies (such as the registry of deeds), over which Massachusetts courts have no jurisdiction.
The SJC held that its emergency Covid-19 orders had a “narrow focus . . . on court operations” and that the language in its orders concerning “statutory deadlines was designed to encompass only those statutory deadlines that affect court operations, i.e., deadlines in cases pending in court or to be filed in court.” Although the SJC acknowledged that filing a complaint in court is required by the Statute to enforce a lien, it noted that the act of “perfecting the lien itself merely requires filing a notice of contract in the registry of deeds – an executive agency charged with the keeping of land records.”
Consequently, the SJC held, its emergency orders applied to court deadlines and procedures and nothing more. The SJC’s decision in Graycor serves as a cautionary tale and reminder that even clever legal arguments may not save you from failure to adhere to the strict deadlines of the Massachusetts Mechanic’s Lien Statute, Mass. G. L. c. 254.
Yet another reason why you should not wait to consult with counsel on the filing of a mechanic’s lien when you are not being paid for work on a private job.
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