When enforcing a bonded off Massachusetts mechanics lien, the rules for enforcement don’t change all that much. Suit must be filed against the bond if the claimant intends to pursue their claim. But, as evidenced by a recent lawsuit, the exact requirements once a lien has been bonded off can be confusing.
Enforcing a bonded off Massachusetts mechanics lien – what’s required?
When a mechanics lien is bonded off, there are a few different ways that the claim can be pursued. We discuss some options in a recent article – What to do if Your Massachusetts Mechanics Lien is Bonded Off.
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In that article, we reference a rule for enforcing bonded off liens in Massachusetts. Specifically: When suit is filed against the surety bond, the claimant doesn’t need to file their complaint with the registry of deeds. Let’s take a deeper look at that rule, and how it came to be.
General requirements stay the same
Enforcing a claim against a bonded off lien is pretty similar to enforcing a lien claim, itself. In both cases, enforcing the claim requires filing a lawsuit. But, when a lien is bonded off, suit is brought directly against the surety bond that has replaced the lien.
Otherwise, the requirements are pretty standard. Suit must be filed against the bond within either 90 days from when the lien is bonded off, or 90 days from when the claimant got notice that the lien was being bonded off – whichever date is later. Suit is also generally brought in the same court as the lien claim would be, too, since the bond is filed in the registry. Further, any procedural rules that come along with filing a Massachusetts lawsuit would remain the same, too.
Let’s talk about bonded off liens:
- Primer on Mechanics Lien Bonds and Bonding a Mechanics Lien
- Don’t Be Afraid Of Threats To Bond Off Your Mechanics Lien
No need to record enforcement complaint against bonded off lien
A recent Massachusetts case, City Electric Supply Co. v. Arch Insurance Co., helps to show exactly what must happen in order to pursue an enforcement action against a bonded off lien. We won’t dive into the details of this case – but, if you’d like a recap, Prince Lobel and Mintz both do a great job covering it.
In City Electric, the lien claimant, Concord Electric Supply Company, Ltd., filed an enforcement suit against the surety bond which had dissolved its lien claim. Now, when a lien enforcement suit is filed in Massachusetts, the lien claimant must also record a copy of their complaint in the registry of deeds (similarly to how a mechanics lien is filed). Further, if there’s a preventative payment bond on the project that protects the property from potential lien claims, and if an enforcement suit is brought against that bond, then that complaint must also be recorded in the registry. These requirements are both set out in the Massachusetts lien statute at § 5 and § 12, respectively.
But – what about a mechanics lien that’s filed, then bonded off, then enforced? Is that treated differently than an enforced lien? Is it treated differently than a suit against the project’s payment bond (which was filed from the start of the job)? The court said “Yes!”
The court decided that when a bonded off lien is enforced, the requirements that may apply to an enforced lien or to a suit against the project’s payment bond should not apply. As mentioned above, the Massachusetts lien statute specifically requires that a suit against the project’s payment bond or a suit to enforce a lien must both be recorded in the registry of deeds. However, when a mechanics lien is filed then bonded off, a claimant does not need to similarly record their complaint.
Why the difference?
For one, the court went by the letter of the law. Strictly speaking, there was no requirement to record the complaint with the registry of deeds. When there’s a payment bond filed from the start of the job, and where suit is filed against that bond – the complaint must be recorded with the registry of deeds. When a lien isn’t bonded off and is simply enforced, that complaint must also be recorded with the registry of deeds. But, when there’s a lien claim that’s bonded off, there’s no statutory requirement to record the complaint.
For another, once a Massachusetts mechanics lien is bonded off, the lien is completely dissolved. So, any rules that may have applied to the enforcement of a lien claim won’t apply. The lien claim, for all intents and purposes, no longer exists. Instead, a claim for recovery may be made against the bond.
It’s a really specific situation, but it’s one that any construction business could find themselves in. But, if a Massachusetts lien claim is filed, then that lien gets bonded off, the claimant who files suit against the bond won’t need to also record the complaint with the register of deeds.