Real property owners hold title to their land and structure-based assets. Being the owner on record at a county recorder’s office allows an individual to take out a mortgage, refinance the property or transfer their ownership interest to someone else.
Occasionally, outside parties can obtain a lien as a way of securing a financial interest. Mortgages and home equity lines of credit are common. Liens held by creditors and other outside parties are less common. However, state law does authorize certain professionals and businesses to request liens against real property in specific circumstances. A mechanics lien can prevent a property owner from refinancing or transferring their ownership interest. Mechanics liens can also result in foreclosure.
When can an outside party seek a mechanic’s lien against real property in Massachusetts?
When owners don’t pay for services or materials
Liens primarily serve as a way of securing valid financial obligations by using the debtor’s valuable property as collateral. Individual professionals and business entities that provide services or materials to property owners can use the property where they perform work as collateral for their outstanding invoices.
They can request a mechanics lien as a way of ensuring that the property owner pays what they should. After recording the lien, the business or professional has leveraged to compel the property owner to make a payment. If they do not, it may be possible to foreclose on the lien to force the property owner to sell or refinance. They can use the funds from that transaction to pay the amount they still owe.
It is common practice for contractors and construction companies to accept partial payment for services and labor. They then produce a final invoice after making the final delivery of materials or completing the work on the project. Usually, contracts with property owners include a specific timeline for making the final payment in full. If the property owner does not pay in a timely manner, then the businesses or professionals that provided labor or materials can take legal action.
Navigating a construction dispute that may result in a mechanics lien can be difficult for those providing construction materials or labor. Businesses and professionals may need help navigating the lean process to ensure they can enforce their right to payment if they do not receive payment in full for services rendered.
