Chapter 424 of the Acts of 2010 Signed Into Law:
Lien Law for Design Professionals
Materials for February 4, 2011 ACEC/MA Member Briefing on this new Lien Law:
On January 5, 2011, Governor Deval Patrick signed into law S2512, which is now Chapter 424 of the Acts of 2010. This was a major legislative priority for ACEC/MA, BSCES, MALSCE and AIA/Massachusetts and other design professional organizations during the most recent legislative session. It was one of ACEC/MA's priorities at both the 2009 and 2010 Design Professionals Day at the State House.
We thank our members and coalition partners who have worked tirelessly to help win passage of this legislation, especially our Legislative sponsors: Senator Karen Spilka and Majority Leader Jim Vallee and their staffers: Erin Souza (Majority Leader Vallee’s office) and Michael Wright (Senator Spilka’s office). We worked closely with AIA/Massachusetts (American Institute of Architects/MA) to advocate for passage of this legislation. The new law takes effect on July 1, 2011. It will provide additional legal protection to Engineers, Land Surveyors, Architects and related licensed design professionals.
And Save the Date: May 10, 2011 for Design Professionals Day at the State House.
About this new law:
Design Professionals-engineers, architects, land surveyors, LSPs and other provide services that create substantial value for property owners. Planning and feasibility studies set out the general scope and configuration of potential development, either as an as-of-right project, or through a process of applying for a zoning variance. Design plans establish the full extent and character of the prospective investment. Construction documents (drawings and specifications) provide a complete technical description of the project, and are the necessary tools for soliciting bids to construct the project. Each of these document types brings a tangible, elevated financial value to the Owner’s land – they establish, with an increasing level of detail, what is possible in a physical the regulatory context of a particular parcel, and they facilitate – are an essential element of - the Owner’s application / receipt of government permission to execute the project.
For a variety of reasons, some land owners regularly don’t pay all or portion of the fees that have been promised to the design professional, often as a normal course of business. Some owners make a habit of hiring a designer for a limited scope of services, don’t pay that designer’s invoices, but instead hire another designer for the next phase of the project, leaving the first with no payments and no prospects for future work on the project. Other owners simply don’t pay the last few invoices after design services are complete – essentially taking a unilateral discount. Some owners ignore the designer’s invoices until enough value has been created, and then sell the project to another developer (“flipping” the project). In all of these cases, a designer’s only recourse has been to sue – an expensive and protracted process that often costs more than the fees owed. Unscrupulous developers know this and have often arrange to withhold payments just below the threshold that would make a lawsuit viable.
This law enables designers to file a lien on the property so that any sale would be encumbered by the obligation to pay the fee owed. Builders have long had this right and filing a lien – or the threat of a filing – has been shown to be an effective way to prevent this abusive business practice. Additionally, this long history demonstrates that the right to file liens has not harmed anyone unjustly; the only individuals or companies who would bear any costs under this new law are those who would abuse the firms they engage.