Litigation-I Win, You Lose vs. Mediation-Win/Win

Image
  Litigation is a zero-sum game.  It destroys relationships and fosters enmity between the parties.  Parties rarely walk away happy.  Even if they win, the expense of litigation is enormous, and collecting on judgments is difficult. Disputes ultimately resolve, but the focus on winning at any cost can lead to prolonged legal battles.  Living with a lawsuit causes ongoing stress, which can distract you from your business and even have an effect on your health. In a courtroom, the final decision lies with a judge or jury who may not fully grasp the complexities of the case. Parties relinquish control over the outcome, potentially leaving them dissatisfied with the final judgment. Mediation has the opposite effect.   Rather than polarizing people, it enables the parties to attack the issues and not each other.     The process promotes open communication, collaboration and problem-solving, which enables parties to actively participate in crafting ...

Mechanic's Liens Basics in Massachusetts

Although I have written about mechanic's liens in the past, the power of a lien cannot be underestimated and bears repeating.  The right to file a lien is a huge advantage for contractors and construction companies, and is a unique tool that helps contractors get paid.  As long as the construction company has a written contract with the owner, it can file a lien on a property within ninety days of the date the it last worked at the project.  If the contractor is a subcontractor, the time for filing is extended to within ninety days of the last date that someone working by and through the general contractor worked at the project.  These deadlines are strict, and if they are missed, then the company can no longer file a valid mechanic's lien.

A lien consists of two documents; a Notice of Contract and a Statement of Account.  The Notice of Contract may be filed at the Registry of Deeds at the start of a project to put the public on notice that the company is working at the property. The Statement of Account provides the details of the contract price, the amount paid, and the amount still owed.  The lien is a public record that states money is still owed for work on the property.  These two documents constitute the mechanic's lien.

What does a lien do?  A lien causes a blemish on the title.  What this means is if the owner has a construction loan, or is trying to refinance or sell the property, the bank will not disburse funds until the lien is removed.  Even if a property owner is not trying to currently sell or refinance, most owners hate having a lien on their property.  They are usually extremely motivated to have the lien removed.

There are only three ways to have a lien dissolved.  One is to settle with the general or subcontractor and have them file a Notice of Dissolution of Lien.  The second is to go to court to have the lien removed because the construction company did not follow the proper procedure for "perfecting" or finalizing the lien.  If the lien is filed too late, the company fails to file suit within ninety days of recording the lien, or if the lien fails in some other way, the owner can file suit to have the lien dissolved.  Finally, the owner can purchase a bond to "bond off" the lien, but this is usually a costly remedy.

If a construction company misses the window for filing a lien, it can still move for a real estate attachment, but this requires filing an action with the court, and it must show a "likelihood of success on the merits."  A mechanic's lien can be filed by a contractor as of right; a party can only file a real estate attachment if a court grants them the right to do so.  That is why a mechanic's lien is a tool that cannot be ignored.

Liens can be an incredibly powerful tool when a contractor or construction company is owed money.  However, unlike most legal actions, the contractor may lose his opportunity to record a valid lien if he does not follow the proper procedures.  

Popular posts from this blog

Eligibility Requirements for the LEED Green Associate Exam from Green Building Education and Training

What are the eligibility requirements for the LEED Green Associate exam? http://www.green-buildings.com/content/78626-what-are-eligibility-requirements-leed-green-associate-exam After March 31st, 2009, candidates for the LEED Green Associate (GA) credentials must fulfill eligibility requirements. LEED Green Associate candidates are required to do ONE (1) of the following: Option 1: You must be (or have previously been) employed in a sustainable field of work This is perhaps one of the more nebulous requirements posed by the GBCI, because no definition of a "sustainable field of work" is given. The USGBC does state that the company needs to "relate to environmentalism or the green building industry". If you are in any doubt that your profession would qualify, contact the GBCI at gbci.org or by calling 1-800-795-1746. Option 2: You must be (or have been) involved in a LEED Certification Project To prove eligibility by way of LEED project involvement, you must have bee...
Read more

When the Homeowner is a Bully

I've seen a new trend in contractor disputes lately, and it isn't pretty.  Some homeowners are making unreasonable demands on contractors, and bullying them into doing work without getting paid.  They unreasonably withhold payments, or impose penalties for delays that they cause.  They expect contractors to do all kinds of extra work without being paid or changing the completion date. I have had a series of these recently.  What is a contractor to do? When first meeting with a homeowner, trust your instincts.  If you are sensing red flags, do not take the job. Never let the work get ahead of the money.  If there is a change order, make sure that the payment is contemporaneous with the work. Make sure that all change orders are in writing and reflect any change in the contract price and date of substantial completion. Include a provision in your contract that entitles you to get attorney's fees if you have to go after a client for payment. Make sure t...
Read more

Should a Contractor Have the Homeowner Test for Lead?

I would like to learn more about the advisability of lead testing.  Homeowners might not want their homes tested for lead, because it becomes public record, and may interfere with the sale of a home or the ability to obtain a mortgage or homeowners insurance.  In addition, I strongly advise contractors not to do the testing themselves.  Let the homeowner pay an independent company to do it.  Otherwise if the GC brings a claim against a lead testing company for a false negative, the company might state that the GC did not use the test kit properly.  If the homeowner does have the house tested, consider refusing to do the work unless the homeowner has lead abatement work done.
Read more