Wednesday, June 7, 2017

Proposed Mass Law Adds Prelien Notice For Private Construction Contracts

Notice of Identification Proposed by MA Legislature

The vexing problem of owners not knowing who is providing labor, materials or services for their project is once again being addressed by the Massachusetts legislature. Massachusetts already has a requirement that a "Notice of Contract" be filed with the county clerk prior to the filing of any lien claim. The Notice of Contract records the existence of a contract, and also provides the property owner with notice that a contract has been entered into. 

This notice, however, has been deemed not to be enough, since most Notices of Contract are not filed until there is a payment dispute. The timing of the filing of the Notice of Contract not only affects lien rights, but is also perceived to put the owner in an awkward position, since the owner would not know that there is a dispute until after it already arose, making it harder to resolve.

The latest proposal has been to require that subcontractors and suppliers, those who do not have a direct contract with the owner, serve the owner with a "Notice of Identification", at the start of the delivery of work or materials to the project. The Notice of Identification would provide the owner with the name of the subcontractor or supplier, the amount of the contract, and with whom the contract is with. Many other states have similar requirements (i.e. Florida Notice to Owner), and sending these notices is routine in these states.

Massachusetts is proposing, in 2017 Bill Text MA H.B. 3721, that the text of the notice also provide the owner with a rundown of its rights regarding potential lien claimants, and is as follows:

The notice must be in at least 10-point bold type, if printed, or in capital letters, if typewritten and must state as follows:
  • "(a)  Any person or company supplying labor or materials for this improvement to your property may file a lien against your property if that person or company is not paid for the contributions.
  • (b)  You have the right to pay persons who supplied labor or materials for this improvement directly and deduct this amount from our contract price, or withhold the amounts due them from us until 90 days after completion of the improvement unless we give you a lien waiver signed by persons who supplied any labor or material for the improvement and who gave you timely notice of identification and/or notice of contract as required under this section."



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