Massachusetts law has long provided for a lien on an owner's
property in favor of those to whom a debt is due for furnishing
labor or materials in connection with the erection, alteration,
repair or removal of a building or structure pursuant to an
agreement with or consent of the owner of such property.
While the law (commonly known as the Mechanics' Lien law and
currently embodied in Massachusetts General Laws Chapter 254)
applies to contractors, subcontractors and suppliers, until
recently it has been limited to those involved in providing labor
or materials employed directly in construction or demolition
activities.
In January, Gov. Deval Patrick signed legislation (Chapter 424 of
the 2010 Massachusetts Acts and Resolves) championed by the
Massachusetts chapter of the American Institute of Architects and
the Boston Society of Architects, amending Chapter 254 to extend to
"design professionals" the benefits of the Mechanics' Lien
law.
Unlike the existing law, which provides a lien for claims arising
under both written and oral contracts, the lien in favor of design
professionals is available only in cases where the design
professional has a written contract either with the owner of the
property or with another person acting for, on behalf of, or with
the consent of the owner. The written contract must be for
professional services relating to the proposed or actual erection,
alteration, repair or removal of a building, structure or other
improvement to real property.
The term "design professional" is defined in the legislation as a
person licensed or registered in Massachusetts as an architect,
landscape architect, professional engineer, licensed site
professional or surveyor, and any entity that is authorized under
the laws of the commonwealth to practice any of the foregoing
professions.
"Professional services" are defined as services customarily and
legally performed by or under the supervision or control of design
professionals in the course of their professional practice and
include programming, planning, surveying, site investigation,
analysis, assessment, design, preparation of drawings and
specifications, construction administration and related
services.
Consistent with existing law, a new Section 2C provides that in
order to acquire such a lien, a design professional must record a
notice of contract at the registry of deeds where the records
pertaining to the land involved are recorded. The notice can be
recorded any time after the contract is executed whether or not the
erection, alteration, repair or removal of the building, structure
or other improvement to which such professional services relate has
been or is ever commenced or completed.
However, to be effective, a notice of contract must be recorded no
later than the earlier to occur of (a) 60 days after the recording
of a notice of substantial completion and (b) 90 days after
such design professional or any person working by, through or under
him last performed professional services on the project.
A new Section 2D also makes a similar lien available to a person
providing professional services under a written subcontract with a
design professional who is entitled to enforce a lien under the new
law. To acquire such a lien, a qualifying subcontractor must also
file a notice of contract within the time parameters set forth
above.
Also consistent with existing law, the lien in favor of a design
professional is dissolved unless, within 30 days after the last day
that a notice of contract could be recorded with respect to the
design services in question, the design professional records a
statement of account, setting forth the amount then due or to
become due. The new legislation retains the existing rule that the
proceeds of any property sold to satisfy mechanics' liens are to be
distributed among the lien holders in proportion to the amounts due
to each, regardless of the date that each lien holder filed a
notice of contract.
However, the new legislation amends Section 21 to provide that if
property subject to multiple mechanics' liens is not of sufficient
value to satisfy all such liens, then the claims of design
professionals shall be satisfied only after the claims of parties
holding traditional mechanics' liens are satisfied.
The new law goes into effect on July 1, 2011. It will certainly
help architects and other design professionals get paid for their
services. It may even reduce the amount of litigation brought by
design professionals since they will be able to establish a lien on
the owner's property without filing a lawsuit. On the other hand,
the expanded lien will be another potential title issue for
residential and commercial owners, lenders and purchasers.
Thomas L. Guidi is a partner at Hemenway & Barnes LLP in
Boston where he chairs the Real Estate Practice Group. His practice
includes all aspects of commercial real estate and financing. He is
a member of the MBA Property Law Section Council.