APPEALS COURT RULES THAT MECHANICS LIENS DO NOT ATTACH TO COMMON AREAS

On December 20, 2011, the Appeals Court ruled in an unpublished decision brought by a contractor against a condominium trust that mechanics liens imposed by contractors are inapplicable in the condominium context and cannot be utilized to attach common areas and/or secure contractor claims for non-payment. The case involves a subcontractor who was not paid by a general contractor hired by the condominium trust to perform work at a condominium.  The general contractor went bankrupt towards the end of the project and did not fully pay the subcontractor.  With no chance of a recovery in bankruptcy, the subcontractor filed a statutory mechanics lien against the condominium building and then filed a lawsuit to enforce the lien against the condominium trust. The subcontractor also asserted a claim for unjust enrichment against the condominium trust (i.e. that the condominium trust should pay the subcontractor since the condominium trust received the benefit of the work performed on the building).

The condominium trust moved to dismiss the lawsuit and dissolve the mechanics lien on the grounds that: (1) Section 13 of the Massachusetts Condominium Act prohibits the attachment of common areas to secure claims against a condominium board, and (2) the condominium trust was the party to the contract and does not own the common areas, but manages them for the benefit of the unit owners by statute. The condominium trust also moved to dismiss the unjust enrichment claim against the contractor on the theory that the subcontractor had written contracts with the now bankrupt contractor not the condominium trust and therefore it was not reasonable for them to expect payment from the condominium trust.

In affirming the Appeals Court held Section 13 OF THE Massachusetts Condominium Act controls and prohibits the use of mechanics lien to attach to common areas.  The Court also held that the contractor could not recover in quantum meruit against the Condominium due to the existence of a contract with the bankrupt general contractor.

The case was handled by MEEB Attorneys Edmund A. Allcock and Katherine Brady.  For any questions regarding this article please contact Ed Allcock at eallcock@meeb.com or at 781-843-5000 (ext. 150). Click here for a copy of the Decision.