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Home>Levelset Community>Legal Help>Do I sue a General Contractor separately and personally (ie try to attach his personal property) since he gave a personal guarantee in addition to our signed Corporate Contract or is that all done in the same Complaint used to perfect a mechanic’s lien against the property that benefitted from our work as a Sub under the General’s Contract?

Do I sue a General Contractor separately and personally (ie try to attach his personal property) since he gave a personal guarantee in addition to our signed Corporate Contract or is that all done in the same Complaint used to perfect a mechanic’s lien against the property that benefitted from our work as a Sub under the General’s Contract?

MassachusettsLawsuitMechanics LienPayment DisputesRecovery Options

Hello, I am a paving subcontractor who has a written contract with the Gen Contractor in the State of Massachusetts. We are owed nearly $65,000.00 for paving work performed during the current construction of a SAI TEMPLE. The property owners of the Temple are currently in dispute with the General because they have paid him for many parts of the project that he hasn’t paid his subcontractors for. We are one of those subs. I have properly begun the filing of a mechanics lien based on my written contract with the General Contractor. I have not yet filed the Complaint but still have some time to perfect the lien. I understand that the lien will go against the actual property where the work was performed and the owners will be named in the lawsuit. My question goes to my rights to file a PERSONAL suit against the General since he not only signed the Contract in his Corporate capacity but also enticed me to do additional work by giving me, on a separately written document, his “personal guarantee” that all monies owed would be paid if I went back to the site to do additional work. He has broken the payment terms of that personal guarantee and there remains the balance of the nearly $65,000.00. I am now being asked by the Temple owners to release the lien so their bank will agree to pay me a portion of the debt owed ($45,000.00). I would still need to get at least $19,000 from the General directly or possibly from the Temple in the future when they are able to occupy the property and raise more donations. Does the mechanic lien that I have started against the property owner attach only to the Temple property? Does perfecting the lien also give me the right to sue the General personally or is that an entirely different lawsuit? If I do not perfect the mechanics lien will I lose all rights to sue the General either against his corporation or personally (because of the written statement that he gave to me)? Since the owners have more money at this moment, I would like to get at least the $45,000.00 from them that they have offered but need desperately to keep secured in my ability to get the remainder from them or from the General somehow. The owners want me to release the lien so the property will not have a lien before their bank will give up the $45,000.00. Not sure the additional personal guarantee that the General Contractor gave to me will help but I expect it should. So, do I sue separately against him personally or will it be part of the Complaint that I file against the Owner of the property and the General Contractor’s Company when I file the Complaint to perfect the mechanic’s lien? Thank you so much for considering my questions.

1 reply

May 22, 2018
That's an interesting question, and we don't see many personal guarantees when it comes to construction payment. First, I'll note that a mechanics lien and the recovery of a debt via personal debt would likely be done separately. A mechanics lien filing would only attach to the project property, not the property of a party providing a personal guarantee. Further, filing and perfecting a mechanics lien does not initiate a lawsuit, so unless that lien is enforced or challenged, a lawsuit would likely not ensue simply from a lien filing. Thus, if recovery against that personal guarantee were sought at the same time, that would need to be pursued through a legal action separate from the lien filing. Because the remedies are not really related, the failure to file a mechanics lien would not preclude recovery from a party who has given a personal guarantee. A party providing a guarantee who then breaks the terms of that agreement, if valid, would be personally liable for breaching that agreement - so again, the lien filing (or lack therof) would likely not affect the right to bring a personal suit. Considering there are a number of moving parts in this scenario, and considering there are multiple parties to juggle, it would be wise to consult a local construction attorney to discuss your situation. This is especially true considering potentially filing a lien against the project property and filing suit against the contractor. To file a suit, a lawyer would (likely) be necessary anyway, so consulting one prior to lodging a lien filing would be a good call. With $65,000 on the line, cutting corners on the road to recovery is a serious gamble.
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