Massachusetts Appeals Court Invalidates Mechanic's Liens Against Condo Common Areas

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A Massachusetts Appeals Court decision last month portends far-ranging implications for the construction industry. The court ruled that a subcontractor's mechanic's lien filed against the common areas of a condominium was barred by M.G.L. c. 186A § 13—a section of the condominium organizing statute which by its terms precludes a claimant from imposing an attachment against the common areas, even where the underlying claim relates to the common areas. The December 20, 2011, ruling in Michael Shea Company, Inc. v. Gary Chellis, et al., 2011 Mass. App. Unpub. Lexis 1322 (2011), appears to invalidate the decades-long practice in which contractors and subcontractors who contract with condominium trustees assert mechanic's liens against the condo trust's common areas (the only property "owned" by the trust). The Appeals Court reasoned that c. 186A § 13 clearly states that claims and attachments may be made "only against common funds or property held by the organization of unit owners and not against the common areas or facilities themselves. . ." and that a mechanic's lien under M.G.L. c. 254 was an attachment and therefore barred.

Michael Shea was a subcontractor with Basepoint Contracting, LLC ("Basepoint"), performing landscaping work in construction of a plaza and connector link at the condominium. Basepoint failed to pay Shea for its work and sought bankruptcy protection under Chapter 7. Shea then recorded a Notice of Contract and statement of account under M.G.L. c. 254 §§ 4 and 8, respectively. Shea's Notice of Contract described the property interest to which the lien would attach as "the common areas and facilities of the condominium known as 50-60 Longwood Avenue, Brookline, MA." Shea then filed suit to enforce its lien and seek recovery in quantum meruit for the value of its labor and materials. The condo trustees moved to dismiss, arguing that c. 186 § 13 barred the lien and that the quantum meruit claim would not lie against the trust, when Shea contracted with Basepoint.

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Published In: Bankruptcy Updates, General Business Updates, Construction Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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