Pending Legislation Concerning Mechanic’s Liens

Construction going on in the city.

Right now, the Connecticut Legislature is considering Proposed Bill No. 5682 (the “Proposed Act”), which states as its purpose “[t]o establish a process for the holder of a mechanic’s lien to establish priority for the lien effective upon the filing of a ‘Notice of Commencement of Work’ with the town clerk for recording with deeds of land.”  The text of the Proposed Act states, however, that the lienor must be an architect and that the lienor’s priority is established upon the date of filing.  Such language raises many questions.

The “priority” of a mechanic’s lien pertains to where the mechanic’s lien stands in line with regard to the other claims against a property such as mortgages and other interest should the property go into foreclosure.  Presently, the priority of a mechanic’s lien relates back to the first date that the lienor, i.e. the person filing the mechanic’s lien, worked on the project.  There is some logic in creating a separate statute for design professionals because – unlike an excavation contractor – no one can see when a design professional starts work but, if that were the reason for the change, why does the Proposed Act only pertain to architects and not engineers as well.  Moreover, inasmuch as the Proposed Act states that the lien’s priority is from the date of filing the notice, would an architect that does not file such a notice lose his right to file a mechanic’s lien or just the priority.  Furthermore, generally speaking, liens arising out of the same project are considered to have equal priority regardless of when the lienor started work but the Proposed Act does not indicate whether it changes the general rule.

In light of the foregoing, the Proposed Act does not seem to have been well thought out and should be opposed.

If the Proposed Act becomes law, Connecticut would not be the first state to require a notice to be filed on the land records before a mechanic’s lien can be asserted.  In the 1996 overhaul of the Massachusetts mechanic’s lien law, that state created a requirement that a Notice of Contract be recorded after the contract’s signing but before 90 days after the last day worked.  Because the notice could be filed immediately, it was the drafters’ intent that recording a Notice of Contract would not be considered an adversarial act.  Of course, the industry has not treated it that way and it was probably a fool’s errand to think that things would turn out differently.

Any filing on the land records is going to get attention.  In today’s economic climate, lenders are being overly cautious as it is.  The last thing Connecticut’s economy needs is a new mechanic’s lien statute that is going to make construction financing more restrictive.  Thus, a new requirement for a “notice” filing would be a bad idea anyway but a statute as ill conceived as the Proposed Act must never become law.

If you should have any questions, please give me a call at (203) 640-8825.

Scott Orenstein