Those of you who work on private projects within the Commonwealth may be interested in a recent Massachusetts Superior Court decision addressing apparent inconsistencies in a contractor’s mechanic’s lien filings.  The decision underscores the importance of accuracy when it comes to perfecting and enforcing mechanic’s liens under the Massachusetts Mechanic’s Lien statute, Massachusetts General Laws, Chapter 254.  This is particularly true when it comes to the claimed lien amount.

In this instance, the contractor had recorded a notice of contract and a statement of account claiming it was owed approximately $300,000.  Sometime thereafter, the developer notified the contractor that it intended to bond off the lien (i.e., secure the amount of the lien by recording a bond in the amount of the lien).  In response, the contractor recorded a second notice of contract and statement of account.  Apparently, this second round of lien filings reflected a substantial increase in the amount the contractor claimed it was owed as well as a decrease in the amount it had been paid, for a total revised claim of nearly $800,000.  The developer filed an emergency motion to  dissolve the contractor’s second round of lien filings on the grounds that there was no basis for the sharp increase in the lien amount claimed.  In this regard, the Mechanic’s Lien statute explicitly prohibits claimants from “willfully and knowingly” claiming more than is due.

Before granting the developer’s request for dissolution, the Court reviewed the parties’ submissions and heard oral arguments.  According to the Court, the contractor was unable to adequately explain the inconsistencies between its first notice of contract and statement of account and its second notice of contract and statement of account.  The Court specifically called out the contractor’s decision to include charges in the second round of lien documents which the developer had already paid, and also noted that the timing of the second round of lien documents was suspicious and “indicative of other considerations at play.”  The Court concluded that there was sufficient information in the record to find that the contractor filed the second round of lien documents “willfully and intentionally so as to reflect an excessive lien such that it would prevent [the developer] from obtaining further financing and save the property from foreclosure.”  In these circumstances, the Court allowed the developer’s emergency motion.

Because mechanic’s liens are creations of statute, lien claimants generally must strictly comply with the applicable statutory requirements when preparing and recording lien documents.  The recordings required to perfect a lien vary based on the facts of a given case.  For example, the statutory requirements differ depending on whether the claimant is a contractor or a subcontractor or supplier.   The statute contains many traps for the unwary.  Defects in timing, notice, language, and references to properties, owners (former and current), landlords, and tenants could be fatal to the lien, depending on the circumstances.

When preparing and recording lien documents, including notices of contract and statements of account, accuracy is paramount.  Lien claimants should expect that courts will scrutinize the facts underlying lien documents before granting relief on the lien, and may consider dissolution if there is a clear defect or, as here, if it is apparent that a contractor has “willfully and knowingly” overstated its claim.  Clear violations of the applicable statutory requirements can jeopardize the very security that the Legislature intended to make available to those who perform certain labor, materials, and services.