On January 5, 2011 Gov. Patrick signed a bill which for the first time provides architects, engineers and other design professionals with the right to obtain mechanics lien protection for unpaid fees. All design professionals working on Massachusetts private construction projects, along with anyone who uses their services, should become familiar with the provisions of this amendment to the lien law, which takes effect July 1, 2011.

DESIGN PROFESSIONAL LIEN RIGHTS UNDER PRIOR MECHANICS LIEN STATUTE

Prior to this new bill, mechanics liens in Massachusetts could be obtained by anyone who provided labor, services, material or equipment on construction projects except for design professionals (“A/Es”). Since 1897, Massachusetts courts had held that most architectural and engineering services were not protected by the mechanics lien statute, which was held “to protect persons engaged in manual labor, as distinguished from those in the learned professions, or others whose activities are chiefly mental instead.” Under the new statute, however, provided that A/Es strictly comply with applicable procedures, they can now obtain mechanics liens which are in many ways comparable to those allowed to other participants in the construction process.

WHO CAN OBTAIN AN A/E MECHANICS LIEN?

Under the amended statute, an A/E lien can be obtained by architects, landscape architects, professional engineers, licensed site professionals, and land surveyors, provided that they are licensed or registered in Massachusetts. A/E liens can also be obtained by “any corporation, partnership, limited liability company, or other legal entity” authorized under Massachusetts laws to practice any of those professions.

WHAT CAN AND CAN’T BE INCLUDED IN AN A/E LIEN?

A/E liens are allowed for the value of “Professional Services,” with Professional Services being defined in the statute as “services that are customarily and legally performed by or under the supervision or responsible control of design professionals in the course of their professional practice, including without limitation, programming, planning, surveying, site investigation, analysis, assessment, design, preparation of drawings and specifications and construction administration services.”

A/E liens can be obtained whether or not the professional services have been completed, and whether or not the erection, alteration, repair or removal of the building, structure, or other improvement has been, or is ever, commenced or completed.

PROCEDURES AND REQUIREMENTS FOR A/E MECHANIC LIENS

In order to obtain a lien, the A/E must satisfy four basic requirements. In addition, A/Es who do not have direct contracts with project owners, tenants or persons acting with their consent, have additional requirements, also described below.

The six basic requirements for A/E liens are as follows:

1. Written Contract In order to obtain a lien an A/E must have a written contract. The contract need not be in any particular form, as long as it is enforceable under Massachusetts law. The written contract can be between the A/E and the owner of “any interest in real property,” or any person acting “for, on behalf of or with the consent of such owner …” In other words, the contract may be between the A/E and an owner or a lessee, or with any entity operating with the consent of the owner or lessee (collectively “Owner”).
2. Notice of Contract The A/E creates a mechanic’s lien by executing and recording a “Notice of Contract” in accordance with a form provided in §2C of the statute. The Notice of Contract must then be “filed or recorded” in the land records of the county where the property is owned. The Notice of Contract can be recorded any time after the execution of the written contract, but no later than the earliest of:
   1. 60 days after filing or recording of a statutory Notice of a Substantial Completion under §2A of the statute; or
   2. 90 days after the 1st tier A/E, or any person performing A/E services under him, last performed such services.
3. Statement of Account Within 30 days after the last day that a Notice of Contract may be filed, the A/E must file or record a Statement of Account. Unlike other filings required by the mechanics lien statute, the Statement of Account does not need to be in any required form, but is required to set forth “a just and true account of the amount due, minus all just credits,” along with the name of the owner and a description of the property. Failure to file the Statement of Account within that 30 days will cause the A/E lien to dissolve.
4. Civil Action The A/E must file a civil action to enforce the mechanics lien within 90 days after the recording of the Statement of Account, by verified complaint, and an attested copy of the Complaint must be recorded in the land records. The lien will otherwise be dissolved.
5. 2nd Tier A/Es Working for 1st Tier A/Es Special requirements applicable to mechanics liens sought by A/Es working for other A/Es are as follows:
   1. A 2nd tier A/E, working for a 1st tier A/E who has the right to file a lien, may file its own lien if it has a written contract and if the Owner approves the lower tier A/E subcontract in writing.
   2. The 2nd tier A/E must then follow the same process as above, but with a different notice of contract form, provided in §2D of the Statute, and must send a copy of the Notice of Contract directly to the Owner.
   3. The 2nd tier A/E lien is limited, however, to the amount owed by the Owner to the 1st tier A/E at the time the 2nd tier A/E records its Notice of Contract.
6. Lower Tier A/Es Working for Contractors or Subcontractors Special requirements applicable to mechanics liens for A/Es working for contractors or subcontractors are as follows:
   1. A lower tier A/E working for a general contractor or subcontractor may file its own lien, if it has a written contract for that work.
   2. The lower tier A/E must follow the same process as above, but with a different Notice of Contract form, as provided in § 4 of the Statute. That Notice of Contract must be filed by the earliest of (i) 60 days after the filing of a statutory Notice of Substantial Completion under § 2B of the statute (ii) 90 days after the filing of the Notice of Termination or (iii) 90 days after the last furnishing of materials by anyone working under the general contractor. A copy of the Notice of Contract must also be sent directly to the Owner.
   3. The amount of this A/E lien is limited to the amount owed by the Owner to the Contractor at the time the A/E records its Notice of Contract.
   4. In addition, A/Es who are not contracted directly with the General Contractor must serve a Notice of Identification, in the form provided at §4 of the statute, within 30 days of commencing work, or the lien will be limited to the amount due from the General Contractor to the party who has hired the A/E at the time the lower tier A/E files its Notice of Contract.

LIMITATIONS ON A/E LIEN RIGHTS

The statute provides that most A/E liens have a lower priority than contractor, subcontractor, supplier and labor liens. If property is sold to satisfy a mechanics lien, contractor, subcontractor, supplier and labor liens are paid first. Only if monies are available after those “working” liens are paid is money distributed for A/E liens. Liens for A/Es hired by Contractors or Subcontractors, however, are not subject to this restriction.

The foregoing is intended as a general guide in connection with the issues discussed herein. It is not legal advice and should not be considered or relied upon as a substitute for consultation with an attorney regarding any particular set of facts and legal issues. The legal and factual issues involved in any particular matter vary significantly and change from project to project, from jurisdiction to jurisdiction and from time to time, and an attorney should be consulted with respect to the facts and law applicable to any specific construction law issue.