Mechanics’ liens to be available to design professionals

Issue May 2011 By Thomas L. Guidi

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.