Q: I own a construction company that specializes in framing new homes. I signed a contract with a land development company to frame new homes in a subdivision. Although we received a considerable down payment for the project, the majority of it remains unpaid. I have driven by the properties in recent days and construction has stalled. It has been 90 days since my team performed work at the property. I have worked with this developer before, and payment was always prompt, but my calls are not being returned. I have heard rumblings that the development company is overleveraged. What are my options?
A: You should consider securing a mechanic’s lien attachment on the property immediately. In New Hampshire, a contractor or subcontractor who repairs or builds a home has a lien on the materials, the structure, and the land itself. This lien arises automatically, but it must be perfected 120 days from the last day services or materials were furnished. This time limitation is strictly enforced, so it is vital that you secure the lien well before the 120-day deadline. To perfect the mechanic’s lien, you must file a lawsuit for the amount owed, obtain an attachment, and record the attachment at the registry of deeds in the county where the property is located. Any lawsuit to secure the lien should name not only the developer who owes you money for your framing work but also the owner of the property if the owner is a different party than the developer.
If properly secured, a mechanic’s lien takes priority over most other liens. If the rumors about the development company are true, a mechanic’s lien will allow you to be one of the first in line to be paid should the property be sold.
Note, in 2013 the legislature amended the mechanic’s lien statute to also protect those performing “professional design service,” including services provided by architects, engineers, septic designers, land surveyors, and wetland and soil scientists.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.