ARE YOU COVERED BY THE NEW DESIGN PROFESSIONAL'S LIEN LAW?

Property owners, contractors, lenders, architects, engineers, LSPs and surveyors should be aware of important new legislation allowing "design professionals" to place a lien against a property to secure payments due under a contract for professional services. The list of design professionals includes architects, professional engineers, licensed site professionals (LSPs), land surveyors and landscape architects who are licensed or registered in Massachusetts. (The list does not include professional wetland scientists, registered sanitarians or other environmental professionals.) This new law took effect on July 1, 2011.

The Mechanic's Lien Law, General Laws Chapter 254, has long provided a mechanism for building contractors, subcontractors and material suppliers to recover money due under a construction contract. Chapter 254 describes how the lien is created (file a notice of contract), perfected (file a lawsuit to enforce the lien), and enforced (sell the property and collect amounts due relative to other recorded security interests), along with many other critical details. However, prior to the July 1st amendments, architects, engineers, LSPs, and other design professionals typically did not have rights under the Mechanic's Lien Law.

Here are some considerations for design professionals (and building owners, developers, landlords and lenders) under the new law. Of course, the statute must be read in full to appreciate all of its considerations.

1.   There must be a written contract. If the written contract is not directly with the owner (e.g., a subcontract with the prime, or first tier, design professional), the owner must approve of the contract in writing.

2.   It must be a private project due to the continued exception for public property.

3.   The design professional must be licensed or registered in Massachusetts. The lien can be claimed by an individual professional or a corporate entity that is authorized to practice one of the professions.

4.   The design professional's lien can be created and enforced whether or not the building or improvement is commenced or completed and whether or not the professional services have been completed.

5.   The design professional may record its Notice of Contract at the Registry of Deeds (or Land Court district) at any time as long as it is before the end of the statutory deadlines (i.e., the earlier of 60 days after Notice of Substantial Completion or 90 days after last performing services), and provide notice of the recording to the owner.

6.   The design professional must record its Statement of Account within 30 days after the deadlines to record the Notice of Contract (see above).

7.   The design professional must file its lawsuit (a Verified Complaint) in court to enforce its lien within 90 days after filing its Statement of Account, and record the Complaint at the Registry within 30 days after it is filed.

8.   The design professional must prevail in its lawsuit and then move to enforce the judgment (e.g., force a sale and recover proceeds) if the matter has not been resolved.

9.   Owners, developers and lenders should consider requiring lien waivers from design professionals as well as design professional subcontractors, just as they require them from contractors, subcontractors and material suppliers.

10.   Owners and developers should consider modifying their construction contracts to require contractors to address liens created by design professionals and to provide indemnification and defense of such liens, just as those provisions may be required for liens created by contractors, subcontractors, and material suppliers.

Please contact me if you or a colleague has a questions on this e-mail or construction projects involving mechanic's liens for contractors or design professionals.