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Can a firm that provided services related to raising capital which funds were used by an owner/developer of a construction project file a lien for their unpaid commissions?

We are registered broker dealer and have raised approximately $20M in financing for a development project in CT. As part of our services, we are due on going fees from the financing. The owner/client has breached their agreement, stopped paying and terminated. While our agreement is quite clear that the fees we are due for the services we provided survives any termination, we want to determine if we have lien rights or if in the state of CT this is only related to construction activities. While our financing was specific to providing funding to pay for the financing, it is related, but would like counsel on whether or not this can be achieved.

1 reply

Mar 12, 2018

As a general matter, mechanics lien rights very typically only arise out of construction work like furnishing labor and/or materials for the improvement of real property. Some states are a little more lenient as to what constitutes "lienable" work, but unless specifically provided for, it's generally unwise to push the envelope too far - penalties for fraudulent or frivolous filings can be steep. On the other side of that coin, where there's ambiguity as to what work might be lienable, lien rights might be leveraged into payment. The risk of a fraudulent or frivolous filing is often alleviated by the release of a questionable lien. Anyway, while some states may provide for a broker's lien rights, Connecticut does not appear to be one of those states. Further, Connecticut is appears to be one of the more rigid states when determining whether lien rights are available. Filing a mechanics lien for work that is not traditionally lienable - especially where the property was not actually improved by the claimant's efforts - could be risky business. Pursuing a different mode of recovery would likely be a safer move, but consulting an attorney familiar with Connecticut construction law might shed more light on the situation. They will be able to look at the surrounding circumstances and provide options for moving forward.

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