Is there a legal process I can undertake (like advertising in the paper) to clear any workmen's liens on a house that I am planning to buy?
In other words, the situation I am trying to avoid is buying the house, then some plumber showing up a year later claiming that he did work on the house and he never got paid. Obviously the debt belongs to the previous owner, not me, so I assume the workman loses his chance to attach the property at some point. What point is that?
Short Answer
Something must be filed within 90 days of the last work done on the property (in your state, there is minor variation in state law from state to state on the exact deadlines, but these are typical for the U.S.). If no work is done on the property after closing and nothing is recorded by a lien claimant by then, you are in the clear after three months.
Filings by the current owner can shorten the deadlines as explained below, but you can never know if there was some contractor that the seller didn't mention.
In practice, however, a seller will usually sign an affidavit at closing that there is no unpaid work outstanding, and in reliance upon that affidavit the title insurance company will issue a title insurance policy under which it promises to pay any liens that are filed after closing. If a lien is filed, the title insurance company will sue the seller for fraud and breach of contract damages, unless the lien filing was frivolous, in which case the title insurance company will pay for the lawsuit to remove the frivolous lien (and sue the person who filed it for slander of title).
In practice, title insurance companies almost never pay claims because they review the public records for lien filings before closing and are ruthless about suing sellers who mislead them. Most of the cost of a title insurance policy goes towards this due diligence prior to closing.
Long Answer
The statutory basis of the short answer is as follows:
A lien under M.G.L. c. 254 Sections 2 and 4 is dissolved unless the person claiming the lien shall record a statement signed under the penalties of perjury giving an account of the amounts due to them. The notice of contract must be recorded not later than the earliest of:
– 60 days after filing or recording a notice of completion;
– 90 days after filing or recording of a notice of termination;
– 90 days after the contractor, subcontractor, or supplier last performed labor or provided materials.
See M.G.L. c. 254 Sections. 2 and 4.
In addition to filing the notice of contract, one must serve the Notice of Contract upon the owner to create a mechanic’s lien. See Ouellet v. Armstrong, 18 Mass L. Rep. 100 (2004)(failure to provide actual notice of the recording of the notice of contract is fatal to a mechanic’s lien claim).
M.G.L. c. 254 Sec. 8 provided that a contractor’s, subcontractor’s or supplier’s lien will be dissolved unless the party claiming the lien records the sworn statement of account not later than the earliest of:
– 90 days after filing or recording a notice of completion;
– 120 days after filing or recording of a notice of termination;
– 120 days after the contractor, subcontractor, or supplier last performed labor or provided materials.
See M.G.L. c. 254 Sec. 8.
After the statement of account is recorded, the general contractor must file a civil action in the appropriate county within 90 days of filing the statement of account and record the complaint in the registry in the county in which the land is located. See M.G.L. c. 254 Sections 5 and 11.
Liens are public records, once filed. You can search for leans on a house by contacting the county clerk or assessor's office (all you need it the address). Many counties have this available online.
An alternative is to engage a title company; finding a lien should be part of their investigation (see above, public records). Many banks require a title check anyway (and/or do one themselves before approving you), so this would normally be discovered in . Note that the title company generally will insure you against failures in their title.
