The Massachusetts Mechanic’s Lien Statute, Mass. G. L. c. 254, enables general contractors and subcontractors to lien properties for which they have supplied labor and/or materials to secure payment for their work. To establish a lien on a property, contractors must file a notice of contract, a statement of account, and a certified complaint with the registry of deeds for the county where the property is located. Sub-sub-contractors, and material suppliers to subcontractors, must also provide a notice of identification to the project general contractor to preserve their lien rights.
Although the basic parameters of obtaining a lien are familiar to most contractors in the Commonwealth, there are unique and unfamiliar situations that complicate, or bar entirely, obtaining a lien on a property.
Under Mass. G.L. c 183A, §13, contractors may not lien condominium common areas. “Condominiums” take many forms beyond what one might normally think. Strip malls, for instance, are often organized as condominiums and have designated “common areas” like parking lots and storage areas.
This prohibition often causes issues where contractors engage directly with condominium associations that no longer retain ownership of any condominium units. In practice, contractors may seek to attach the association’s bank accounts instead of a lien, but would be wise to do so with the advice of counsel.
Counsel may be needed to review the Registry of Deeds website for a property before beginning work to determine whether the property is held under a condominium association. A “master deed” on file with respect to a property is a tell-tale sign that a condominium association owns the property. Research as to whether the condominium association retains any part of the property that would allow a contractor to obtain a lien should be done by counsel.
Where a contractor works directly for a company or person that leases a property, that contractor can usually only lien that person’s leasehold interest in the property. Liens on leaseholds are not as powerful of an enforcement mechanism for contractors because they do not allow contractors to seek foreclosure on the property to recoup unpaid amounts. Further, liens against leaseholds expire when the lessee’s rights to rent the property expire.
Under Mass. G. L. c. 254, however, contractors may attach the property itself, even when working and contracting directly with a tenant, if the property owner consents to the work. A property owner’s consent can take many forms – the owner can directly inform the tenant he consents to the work, the owner’s actions can indicate consent, or the tenant’s lease can also provide blanket consent for the tenant to perform renovations.
In any situation where contractors suspect they are working directly for a tenant, ensuring that the property owner is aware of and consents to the work is vital in preserving lien rights against the property, and not just the tenant’s leasehold interest.
Business owners or individuals with questions are encouraged to speak with a Kenney & Sams construction attorney.
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