Home>Levelset Community>Legal Help>In MA, once you file the intent/lien notice and the customer goes bankrupt, do you waive your right to file the lien?
In MA, once you file the intent/lien notice and the customer goes bankrupt, do you waive your right to file the lien?
Work has been completed, we have invoiced and have waited over 60 days for payment, we are not getting any answers other than it will be released once approved by management. It is for a commercial customer and we are the main contractor.
1 reply
Mar 7, 2018
This is an interesting question, and it's one that we see from time to time. Whether or not a mechanics lien will persist through a bankruptcy filing will depend on a combination of timing and state law. When bankruptcy is filed, an "automatic stay" is instituted. Typically, this stay acts as a cut off date - it bars collection efforts once the stay is instituted. Mechanics liens typically provide a benefit here - in many states, the date of a mechanics lien will "relate back" to the time when work on a project first started. This means that, often, even if a lien hasn't been filed at the time of the automatic stay, a lien claimant might still be able to make a claim. In states where mechanics liens relate back, a lien need not be filed to escape being blocked by the automatic stay. However, in Massachusetts, it appears that liens do not relate back for bankruptcy purposes. This means that a filed lien will survive bankruptcy, but one that has not been filed will not. Perfecting a lien is a two part process in Massachusetts, though, creating another variable. For purposes of bankruptcy, it appears that a lien is established at the time a Notice of Contract. Thus, it appears that if a Notice of Contract has been filed in MA, a mechanics lien would survive the automatic stay. If such a filing has not been made and the automatic stay has been instituted, a claimant may find themselves on the outside looking in. This article might provide more clarity on the general relationship between mechanics liens and bankruptcy: The Indispensable Guide to Mechanics Liens In Bankruptcy.