Construction projects don’t always go as smoothly as expected. Payments can get delayed and payment disputes can happen. If you work as a general contractor, you will probably at some point deal with a delinquent property owner who simply refuses to pay up.
When this happens, your best course of action is to file a mechanics lien. In Massachusetts, filing a mechanics lien in order to recover payment from a delinquent client is a two-step process. The first step is recording a document called the Notice of Contract.
This guide will tackle all the important questions that you as a general contractor might have about the Massachusetts Notice of Contract, from how to prepare the form to how you must record this document in the county clerk’s office.
A Massachusetts Notice of Contract is the first document that you must file if you want to record a mechanics lien in the state of Massachusetts, the second one being the Statement of Account. It is a document that contains all basic details about your project, including the amount that you are trying to claim.
A Notice of Contract also includes a breakdown of the payment for the services that you furnished to a project. The payment breakdown generally consists of the total contract amount, the payments that have been made so far, and the payments that are being disputed and are yet to be released by the property owner.
The Notice of Contract may be filed by all general or prime contractors, or those parties who have a direct contractual relationship with a property owner.
There are no specific licensing requirements before a general contractor can record a Notice of Contract, but do note that Massachusetts may penalize any party who performs work without a valid license, if a license is required in their profession.
A general contractor in Massachusetts must file a Notice of Contract by whichever is the earliest among these dates:
In general, the deadline falls within 90 days after your last day of work. However, as implied by the list above, this deadline may be shortened if the property owner files a Notice of Substantial Completion.
You must, therefore, keep open communication with the property owner to know if the said notification was recorded and if your Notice of Contract deadline is consequently shortened.
Filing a Massachusetts Notice of Contract greatly improves your chances of receiving the compensation that you worked hard to earn. If your client is being difficult, recording a Notice of Contract will most likely urge them to settle the outstanding debt and finally pay up.
This is because a Notice of Contract gets recorded in a property’s public books. Potential buyers and financiers can see your Notice of Contract, and they will know if there are still outstanding payments that they might inherit if they invest in a property.
In effect, a Notice of Contract limits a property’s market value because potential investors would not want to spend money on a property riddled with payment disputes. Property owners are wary of dealing with a mechanics lien, and they will almost always try to get rid of one by finally paying their general contractors.
When preparing your Massachusetts Notice of Contract form, make sure that you have the following details:
Massachusetts state laws recommend general contractors to write their Notice of Contract in substantially the following form:
Notice is hereby given that by virtue of a written contract
dated , between ___ ___ contractor (or subcontractor) and ___ said ___ is to furnish or has furnished labor or material, or both labor and material, or is to furnish or has furnished rental equipment, appliances or tools, or is to perform or has performed professional services, in the erection, alteration, repair or removal of a building, structure or other improvement of real property by , contractor, for , owner, on a lot of land or other interest in real property described as follows:
(Insert description)
As of the date of this notice, an account of said contract is as follows:
1. contract price $______________
2. agreed change orders $______________
(indicate whether addition or subtraction)
3. pending change orders: $______________
(indicate whether addition or subtraction)
4. disputed claims $______________
(indicate whether addition or subtraction)
5. payments received $______________
The regular mailing address of the party recording or filing this notice is as follows: ____
After preparing your Notice of Contract form, you have to record it in the Registry of Deeds in the same county where the property is located.
Recording a Notice of Contract may be done by visiting the Registry of Deeds office or by mailing the form together with the money order that covers the filing fees. Always keep in mind that there are filing costs associated with recording a mechanics lien document. You can call the clerk’s office before mailing your Massachusetts Notice of Contract to know the exact filing fees.
Also remember that if a payment dispute comes up and you decide to file a Massachusetts mechanics lien, your Notice of Contract must be filed by the following deadlines, whichever is the earliest:
Make sure that you file your Notice of Contract on time in order for it to be valid. Filing a Notice of Contract after the applicable deadline has elapsed will automatically nullify your Massachusetts mechanics lien.
Note that general contractors are generally not required to notify a property owner if a Notice of Contract has been filed. However, serving a copy of the Notice of Contract on the property owner is still a good idea as it might encourage the owners to settle the payment debt right away.
A general contractor must be mindful of which of the three deadlines is the earliest to ensure that they file their Notice of Contract on time. Generally, the deadline falls on the 90th day after your last day of work, but this deadline may be cut short if a property owner has filed a Notice of Substantial Completion.
Maintaining an open communication line with the property owner will help you track if the relevant notices have been filed. Be mindful of those notices so you will know if the deadline for filing a Massachusetts Notice of Contract is fast approaching.
Subcontractors and lower-tier parties are required to serve a copy of the Massachusetts Notice of Subcontract on the property owner. General contractors are exempted from this requirement; however, you are still advised to notify your client once you have filed a Notice of Contract. Notifying a property owner about the Notice of Contract could nudge them into releasing payment, so it is a step that is worth taking.
Filing a Massachusetts mechanics lien is a two-step process: first, you file a Notice of Contract, then you file a Statement of Account. Make sure that you know how to prepare a Massachusetts Statement of Account for general contractors, as you need to record this document if you want your mechanics lien claim to be valid.
