SUPPORTING DOCUMENTATION FOR THOSE CLAIMING OR DEFENDING AGAINST MASSACHUSETTS PAYMENT BOND CLAIMS, MASSACHUSETTS MECHANICS’ LIENS AND MASSACHUSETTS HOME IMPROVEMENT CONTRACT ISSUES
JULY 18, 2021
I. INTRODUCTION (AND HOW WE CAN GET STARTED).
I receive several calls a week from potential new clients having one of the above needs or concerns, among others. They want to tell me their story on the phone at some length but without first organizing their thoughts and structuring their information in such a way as to be useful to me in reviewing their problem. Telling me their stories in this manner is both inefficient and takes an enormous amount of time, which could be a critical issue in terms of taking timely action on any of these matters. And, my time is money which means that, ultimately, this is your money. And, it is my goal that you don’t have to spend any more of it than is strictly necessary. So, I have prepared this kind of guide to help us both achieve this goal.
For some new potential clients, they leave long, rambling messages on my voicemail, suffering from the same issues as above.
For these and other reasons, I do not use voicemail and have disconnected my voicemail. My telephone number is 5086686020. My email is jonsauer@verizon.net. I try to return email messages within one day. I am generally at this number all day on Tuesdays and Thursdays, subject to court appearances and meetings, and in the office generally 2pm or later on Mondays, Wednesdays and Fridays. Existing clients, if there is an emergency, can call me outside of business hours.
I will not generally discuss a matter with a potentially new client who has not first prepared a written summary of their issue, the content of the written summary being described under the first section below, that having to do with payment bond claims. An exception will be a true emergency. (Not knowing what to do in a given situation does not, in and of itself, constitute a true emergency.)
My having the written summary before we speak allows me to quickly determine whether or not I will be able to help you with your problem. As such, the written summary is useful for both of us. I don’t expect it to be perfect or as complete as is suggested below. But, the more information I have, the quicker I can determine whether or not I can help you and what other information and documents I will need to get started.
Now, as to the subjects listed in the title of this document.
You will see that I have articles on my website (www.sauerconstructionlaw.com) on each of these topics. They can be found by hitting the ‘Construction Law Articles’ button and the ‘Squibs’ button on my homepage. Reviewing these before you call me will help you understand in advance of speaking with me what some of your issues are likely to be and will help you organize your thoughts, information and documents. This will make our conversation more productive.
I don’t know of any other lawyer that does as much as I do for ‘free’. Everything on my website is free. You will not find anywhere a construction lawyer’s website, all written by just one person, with even remotely the same amount of material that mine contains (numbering in the thousands of pages.) My monthly newsletter is free. My construction law seminars given twice a year are free. These things are written/presented at my cost, not at yours.
The only thing further that is free from this point forward for non-clients/potentially new clients, however, is one fifteen minute conversation per person/company living in or doing business in Massachusetts. I do not provide out of state contractors with projects not in Massachusetts such a free conversation. And, I’ll also review a written summary of your problem or concern, provided that it shows that you have researched this issue with these free resources and it is well-organized and well-thought out. I do not review any documents for free. The written summary doesn’t have to cover everything indicated below that may be helpful. But, the greater the detail I receive, the better my ability to review your issue and give you my impressions considering your situation.
Other than the above subjects, I provide other services, as well. For example, I handle Massachusetts public work bid protests. (There is an article about this on my website.) I spend a lot of time drafting, reviewing and revising contracts and lien waivers and releases. One of the things I enjoy most is giving general business advice and advice about jobs/issues/situations that are developing. Having done this for 45 years, I’ve seen most issues a time or three. The earlier an attorney can get involved with a problem you are encountering, the better the chances of your receiving a better (and earlier) result and incurring a lower legal cost while doing so.
In terms of getting my read on an issue that doesn’t fit neatly into any of the above categories, please summarize your issue in a well-thought out summary of your problem, suggestions as to the potential content of which are made below. And, please keep in mind that while there are references below to any number of documents, I will only review them once we decide to proceed with an attorney-client relationship.
I am not allowed by lawyer regulations to give legal advice to non-clients until there is a written, signed fee agreement. For each new client, there will be a required legal fee advance for the first matter (a retainer) and, generally speaking, not subsequently. Exceptions to this include things such as preparing new litigations or defending new litigations, bid protests and more complex mechanics’ liens, all of which can be very time-intensive during a short period of time.
With very few exceptions, I only work based on an hourly rate. For many types of cases, sometimes it works best for someone seeking legal assistance to look into hiring a collection-type lawyer, who works off of a percentage of whatever is collected. Such cases can include claims for smaller amounts of money, that would make use of an hourly rate lawyer uneconomical. And, such cases might also include claims that the legal system will see as questionable claims. In other words, not clear winners. The Massachusetts Bar Association can help hook you up with these types of attorneys through their Lawyer Referral Service, contact information for which can be found on the internet.
I can give cost estimates for certain things but they are only that: estimates and not guarantees. What I do is complicated, a lot of which is adversarial. I liken the adversarial process to having two surgeons working on a patient having an appendectomy. While one surgeon is trying to take the appendix out, the other is trying to put it back in at the same time! For these and other reasons, it’s very hard to anticipate up front how long something is going to take and what the legal fees will be. Superior court litigations take five years to come to trial. Yet, only one percent of all such cases actually goes through a complete trial. I can’t tell up front whether or not any particular matter will settle with the writing of one letter (highly unlikely) or whether the matter will be tried and, possibly, appealed to a higher court.
The most legal fee-intensive case I have been involved with in the past ten years had to do with more or less run of the mill issues involved with a residential purchase and sales agreement. I have been involved with several million dollar cases that incurred significantly lower legal fees/court costs than that case. My clients’ opponent and its counsel were beyond unreasonable and showed little interest in solving the problem.
An opponent’s attitudes - and those of its attorney - cannot be anticipated up front.
After reviewing your written summary and discussing the issues with you, while I cannot give you legal advice, I can give you my impressions as to the situation you present. Please do not confuse such impressions with legal advice, however, because they are not legal advice.
I will give you one piece of advice, however. Read as much from the thousands of pages on my website as interests you and as is relevant to your business. Read my newsletters (the Squibs). Go to my construction law seminars given on a wide variety of topics, generally offered in April and in October. My experience has been that contractors who don’t try to educate themselves as to these matters are greatly more likely to fail.
Sometimes, giving bad news makes me feel like I am an oncologist. (And, due to peoples/companies performing in a sphere and environment which they didn’t/don’t understand without first seeking professional help, I am forced to give a lot of bad news.) But, I am not an oncologist. Because, I write and teach as much as I do to do something that a oncologist can’t do. And, that is to try to prevent problems, not just treat them once their existence is clear. But, none of the articles on my website is going to help you unless you read them before your project gets going.
I am a contracts lawyer. I can prepare for you a good, written contract. But, I can’t correct the errors that are in a contract that you have already signed. And, a court will be enforcing that contract. In the vast majority of cases, it does not matter that the contract is clearly one-sided and unfair to you/your company. Courts simply lack the authority to rewrite contracts. And, they don’t do that. It’s up to you to only sign good contracts. Or, at least, fair contracts.
An attorney’s coming into the problem late in the problem without having had an opportunity to try to prevent the problem or minimize that problem or manage that problem will have fewer options than one being involved with the contract before work even begins. And, it will be a lot more expensive. These are just the facts.
Humpty Dumpty, lying on the ground, almost certainly wished that he hadn’t fallen off of the wall. His wishes, at that point, however, are irrelevant. To be clear. Your attorney engaged for the first time now to try to put the broken pieces back together again did not construct the wall. S/he wasn’t even there, at the time, to yell ‘watch out’.
For every 100 construction companies started today, statistically, only 34 will be in business in five years. I end most of the things I write with “Knowledge Is Money In Your Pocket. It Really Is!” And, it really is!
The root word for both ‘contractor’ and ‘subcontractor’ is ‘contract’. A good understanding of basic construction contract law - which I teach in my seminars - is, in my view, essential to any company’s survival, let alone success.
If you take that to heart and show good management skills and have some luck, hopefully, you will be among the companies that are still chugging along in five years, after having become larger and more profitable during that period of time!
The information given anywhere in this article is informational only and should not be considered to be legal advice. Because, that is not what it is intended to be.
II. MASSACHUSETTS PAYMENT BOND CLAIMS.
A. THE WRITTEN SUMMARY.
I will want a ‘once upon a time’ written summary of your experience. How did your situation begin? Where is it currently now?
Particularly for homeowner claims, I don’t expect the summary to be as detailed as indicated below. But, the more information I have, the better I can understand your problem.
This can include information on such as what follows.
What was your first contact with your contracting party? Did you make a proposal? Was it accepted? Was there a written contract entered into? What problems developed, both as to performance of the work and as to the charges incurred? Were there change orders? Are there outstanding change order proposals? What did the other side do that was wrong? What writings (emails and letters) are there bearing on these issues? What is the exact state of your trade and project at this moment? How much money are you owed (or your contractor claims is owed to it?) Has either party terminated the other? Is your work substantially complete? Have you completed your punch-list work? Do you have a writing (or can you get a writing) from the architect or owner confirming this? When did you last work, defining ‘work’ as the performance of your last contract work and not the performance of punchlist work for which you have already been paid or warranty work?
(For second tier material suppliers and subcontractors) what notices to the general contractor, owner and architect have you given as to your situation and claim? For general contractors and homeowners, have you obtained quotes to complete your contracting party’s work? For homeowners, did you have any of the design documents prepared by your own architect or did you simply accept what the contractor gave you? And, as to any such design documents given to you, did you have them reviewed by your own architect? Particularly for home improvement contracts, were there any real specifications and contract drawings other than architectural drawings? Architectural drawings prepared for the construction of a new house are quite often as useless as zits on a bull. And, who likes having zits?
What pictures and videos do you have evidencing any of the issues discussed herein? Do you have a copy of the general contractor’s payment bond? (You can generally get this from the owner on a public project, as this is a ‘public record’.) For a mechanic’s lien, when did you last work or supply materials? And, when did the general contractor or any other of its subcontractors last work or supply materials? For contractors, what bills have you given to your customer? What have you been paid? What are you owed? What backcharges, if any, have you either given or received?
For contractors and subcontractors, I will ultimately need to see ‘the front end’ of any bid document describing your job, which would include the general contract, all general and supplementary general conditions and the relevant specification section(s) applicable to your issues. If there is some aspect of a contract drawing(s) that is key to your issue, I’ll need to see a copy of that at some point.
Now, here’s the part folks don’t generally like but that is critical for me to know and understand. What is every argument that the other side has that will support its contention that you are the one who breached the contract and/or are the party in the wrong? I understand that you may not accept some or all of such contentions. But, if I am going to try to defend against them, I have to first know and understand what they are. And, knowing what they are might determine how I want to approach the problem.
Good facts tend to take care of themselves. Bad facts don’t. So, in order for me to be most effective for you, I have to know, in advance, what the other side is going to contend.
In terms of what documents I will need to see if we decide to proceed together with this matter, these may include as many of the documents dealing with the subject matter identified above or elsewhere as you have access to or can get.
Does this sound like a lot of work to prepare the written summary? It is a lot of work. Welcome to dispute resolution/litigation! Dispute resolution/litigation is a lot of hard work.
B. FOR A MATERIAL SUPPLIER/SUBCONTRACTOR WISHING TO FILE A PAYMENT BOND CLAIM.
I have a number of articles in the Construction Law Articles you might want to read as to how to do this.
These include “CLAIMS AGAINST PAYMENT BONDS - THE ADVANCED COURSE”.
Other information is contained within the Squibs: Scribbles Squibs # 6 (March 13, 2013): “BOND. PAYMENT BOND. LICENSE, 007, TO KILL THIS RECEIVABLE.”
C. DEFENSIVE STRATEGIES FOR CONTRACTORS AGAINST WHOSE BONDS PAYMENT BOND CLAIMS HAVE BEEN MADE.
Information as to how to defend against bond claims can be found in the Construction Law Articles: “CLAIMS AGAINST YOUR BID, PAYMENT AND PERFORMANCE BONDS - STRATEGIES TO HELP YOU PROTECT YOURSELF WHEN TIMES GET TOUGH”.
Sauer Squibs # 21: “DEALING WITH YOUR SURETY AS TO CLAIMS AGAINST YOUR BONDS.”
III. MASSACHUSETTS MECHANICS’ LIENS.
I will want a written summary of your issues, the typical content of which will be similar to that discussed above in the payment bond section discussing and detailing written summaries.
Mechanics’ lien law is highly statutory, meaning that these rights are largely defined by the Massachusetts General Laws.
It will probably help you to read one of my articles in the Construction Law Articles: “THE NEW MASSACHUSETTS MECHANICS’ LIEN LAW.” Or, “MASSACHUSETTS’ MECHANICS’ LIEN LAW AS OF 2012." If you only have time to read one of these articles, read the article from 2012.
Contractors are interested in filing liens. Homeowners are interested in defending against liens.
A. MATERIAL SUPPLIERS, SUBCONTRACTORS AND GENERAL CONTRACTORS FILING A LIEN.
It is important for material suppliers, subcontractors and general contractors to understand the different requirements pertaining to the filing of the ‘notice of contract’, the ‘statement of account’ and the lawsuit to foreclose (establish) the lien, which are the three basic documents/steps as to the filing and perfecting of a mechanic’s lien. Second tier subcontractors have to understand these things plus understand the rules applicable to serving a ‘notice of identification’, which, for them, is a fourth step.
Examples of these forms are contained within my Construction Law Articles.
To file a lien, I need the following specific information:
Original contract amount:
Agreed change orders:
Pending Change Orders:
Disputed Claims:
Amount received:
Amount currently due:
You have to understand this can be a complicated process, which my articles explain. Every now and again, I’ll have a lawyer call me up, asking me to explain it to them! The good news is that when liens work, they generally work fairly quickly. That may mean that no lawsuit may be required for you to get paid. The bad news is that if they don’t work quickly, they are probably not going to work at all. All of the reasons supporting the various statements made in this paragraph are discussed in detail in my mechanics’ lien seminar.
B. HOMEOWNERS DEFENDING AGAINST A MECHANICS’ LIEN.
Whether you know it or not, you have an automatic homestead right in the equity you have in your home of $125,000, which is an amount of money that a creditor cannot attach. It is very hard to defeat a homestead. Adding that homestead amount to the amount of the mortgage you have outstanding gives an initial figure as to what amount of money cannot ordinarily be reached through a contractor’s lien. So, if you have a mortgage of $375,000, the first one-half million dollars of the value of your house is protected against a contractor’s lien.
Now, by paying a nominal fee - $35.00 - you can file a homestead for your house that extends the homestead amount to $500,000. At the age of 62, the value of this homestead increases to one million dollars.
To file a declaration of homestead, type into your URL “Massachusetts Secretary of State”. Then, on his homepage hit the ‘Registry of Deeds’ button and there he explains how to go about this and even gives you the fairly simple form necessary to file with the Registry of Deeds, which you can prepare yourself.
If two or more people own the house, it is often useful for each owner to file his/her own declaration of homestead.
This is very inexpensive anti-creditor insurance! Whether you owe your contractor money or don’t, anyone can get involved with a horrific automobile accident. What if someone claims you caused the accident? If you were one of the drivers, someone will be suing you. What if you don’t have enough insurance? Protect your house!
There are any number of lien law provisions that favor homeowners, such as involve, for example, subcontractor liens. Reading the referenced articles, you will find out what they are. Or, come to one of my seminars and I will explain it!
IV. MASSACHUSETTS HOME IMPROVEMENT CONTRACT ISSUES.
I will want a written summary of your issues, the typical content of which will be similar to that discussed above in the payment bond section discussing written summaries.
As a good introduction to these issues, you might look at a ‘suggested’ minimum form of home improvement contract prepared by the Commonwealth of Massachusetts, which can be found at https://www.mass.gov/doc/sample-home-improvement-contract-0/download. This is not a state-required or mandated form. Rather, it is a state suggested form.
If you look at this, you will note in bold in the first paragraph: “but does not include standard language to protect homeowners. Seek legal advice if necessary.” In other words, homeowners, the content of this contract can be improved in your favor. Provided that you speak with someone such as myself before your project gets going.
The worst possible thing a homeowner can do is to simply sign whatever contract is presented to them by the contractor. I’m not sure I have ever seen even one of such contracts that remotely complied with Massachusetts law.
When this is coupled with a homeowner’s allowing a contractor to ‘design’ the project? Well, this is a lot like allowing a fox to guard the henhouse. A great deal for the fox. Not such a great deal for the hens. Who don’t generally enjoy being Sunday dinner.
I have reviewed this contract form and have made comments on several provisions of this, including explaining what they mean, which can be found in my Construction Law Article: “MASSACHUSETTS HOME IMPROVEMENT SAMPLE CONTRACT WITH COMMENTS”.
It will probably help you to read my article in the Construction Law Articles: “SPECIFIC STRATEGIES TO ASSIST MASSACHUSETTS HOMEOWNERS IN GETTING WHAT THEY ARE ENTITLED TO FROM AND UNDER THEIR HOME IMPROVEMENT CONTRACTS AND PROJECTS”.
Recognizing that you may be reading these words for the first time late in the construction period of performance (and, unfortunately, late into your problems), if nothing else, this may help you to not make any further mistakes.
Do as many of the things as are still possible to do as described in the above article.
You may also want to read: Sauer Squibs # 29: “PROTECTING HOMEOWNERS WITH THEIR MASSACHUSETTS HOME IMPROVEMENT CONTRACTS”.
Homeowners, and other novices to the legal system, think (hope) that having a lawyer send a poorly-performing contractor a ‘lawyer’s letter’ is going to (somehow) get the contractor to better perform. Such letters seldom work, particularly for any contractor who has a demonstrated history of poor performance. Experienced (with litigation) contractors know how expensive and how long it takes for you to get a judgment against them. And, they know that a lot of homeowners will not be able to pay the lawyer/court fees and costs to get to that point.
When homeowners ask me ‘how much will it cost to send them a letter,’ I don’t give quotations. Until one gets into a situation and identifies the issues and studies the contract, the amount of time required to prepare and send a letter of any value cannot be determined.
While preparing to send such a letter may have questionable value in and of itself, preparing to send one will also be doing some of the work necessary to take your dispute further. So, the time (and cost) in preparing such letters may not be completely wasted. But, long experience has taught me that such letters – most of the time – will not solve your dispute.
V. DRAFT/REVIEW/REVISE A MASSACHUSETTS CONSTRUCTION CONTRACT.
Other documents/information are likely to be needed. But to start out . . . .
To draft a contract for you. Some information about your business. What do you do for volume per year? What is your average contract size in terms of dollar amount? What are the issues you usually come up against on your jobs in terms of relating to the performance of the work or in getting paid? What do you currently use as a proposal to customers? What do you currently use as a contract with your customers? (For general contractors), would a ‘master subcontract’ benefit your business?
For a subcontractor who wants me to review or suggest revisions as to a subcontract provided by a general contractor. I would need to see a copy of your proposal and a copy of the proposed contract. What issues can you anticipate might cause you problems with this kind of job (generally) and/or with this specific job and/or with this contractor? A history of your experience working for this contractor previously, if you have one, is helpful.
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