As we move into the new millennium, Massachusetts has moved out of the dark ages and revised its mechanic's lien statute to make it more friendly to the Construction Industry. Prior to 1997, a contractor had to record a Notice of Contract before the specified contract "completion date" in order to have an enforceable mechanic's lien. Such recording often lead to a combative relationship among the owner, the contractor and the subcontractors as work on the project moved forward.
The new statute (M.G.L.c. 254) has done away with the concept of a "completion date" for the deadline in filing a Notice of Contract. Instead, the statute uses the generally accepted definition of substantial completion for the purposes of computation of the deadline for recording a lien. Now the recording or filing of a Notice of Substantial Completion allows a contractor or subcontractor to record a Notice of Contract within 60 days thereafter to have a valid lien. If the owner should terminate its contract with the general contractor, then the owner records a Notice of Termination which allows the general contractor or subcontractor 90 days to record a Notice of Contract.
Once a Notice of Contract is recorded, a Statement of Account must be recorded within 90 days after the date of actual substantial completion or 120 days after the date of actual termination. Once a Statement of Account is recorded, then a complaint must be brought within 90 days to enforce the lien. The new statute increased the number of days for suit to commence from 60 to 90 days in an attempt to allow the parties a greater period of time to review figures and negotiate a resolution. After a complaint is filed in Court, it must be recorded within 30 days at the Registry of Deeds to validate the lien.
A major change to the statute occurred in relation to "second tier" subcontractors, suppliers and materialmen. Such groups are now allowed to make a mechanic's lien claim which they never had the ability to do under the old statute. These groups may now provide the general contractor with a written Notice of Identification within 30 days from commencement of their work to protect their interests within the project's funds. Such entities can, in the alternative, file a Notice of Contract. It is recommended, though, that a Notice of Identification be given to the general immediately after commencing the work because otherwise such groups can only obtain a lien on the unpaid balance between the general and the contracted subcontractor at the time of filing the Notice of Contract.
It is also recommended that any such contractor that has completed its work, file a Notice of Contract after an account becomes 60 or 90 days past due. The recording of a Notice of Contract gives that subcontractor or second tier group priority over subsequent claims of different groups. It also places the owner and/or general on notice that its claim needs to be addressed and resolved now before any change in ownership or financing is contemplated.