A Note on Subcontractors’ Liens

In this economy, it is not uncommon for general contractors to fail to pay their subcontractors, whether the general project was completed or not.   Pursuant to our general laws, subcontractors have a way to protect themselves from these unscrupulous acts, by filing a notice of contract in the appropriate registry of deeds.  They can only do this however, if they first execute a written contract with the general contractor to perform labor or furnish materials.  If they do everything properly, they obtain a lien against the property.  If the property owner then pays the general contractor without ensuring the lien is satisfied first, the subcontractor can still file an action against the property owner to obtain payment, but only to the extent that money is due or to become due the general contractor on the date that the subcontractor complied with the recording and notice requirements.  Unfortunately for property owners and subcontractors both, the subcontractors often wait to file a notice of contract until after problems arise, resulting in litigation over whether the property owner(s) still owed money to the general contractor on the day the lien was perfected.  Fortunately for property owners, the appellate courts require strict compliance with the law on this issue, which the Massachusetts Appeals Court reminded subcontractors of earlier today.  If no money was owed the general contractor for any reason, whether because payment was already made in full, or for any other reason, the lien fails as a matter of law.