Getting Paid Faster with Liens, Bonds, and Contracts - Massachusetts Webinar

In this webinar hosted by SunRay Construction Solutions and legal expert Jessica Murphy, contractors, subcontractors, and suppliers in Massachusetts will get the knowledge and tools to get paid faster. From leveraging liens and bond claims to drafting stronger contracts, this blog covers the legal strategies and documentation practices that can protect your payment rights and improve your bottom line

Why Faster Payment Matters

If you’re in charge of accounts receivable or collections, you already understand that time is money. Unpaid invoices not only create cash flow issues but also increase financial risk. Here's how:

• Inflation and Opportunity Costs: A dollar today is worth more than a dollar tomorrow. Funds tied up in receivables can’t be reinvested in other opportunities.

• Debt Interest: Delayed payments often force businesses to take loans to meet payroll, order materials, or cover operational costs.

• Operational Inefficiencies: Chasing payments drains internal resources that could be spent on growing the business.

This concept is known as the time value of money—a cornerstone of financial planning.

Let’s put it into perspective with an illustrative comparison:

Which would you choose?

A contractor is owed $50,000. Which of the following scenarios would be most beneficial?

1. Option A: $49,000 paid within 10 days (2% discount for early payment)

2. Option B: $50,000 paid in 120–240 days after filing a mechanic’s lien

3. Option C: $62,000 judgment after 2 years (includes 12% statutory interest)

4. Option D: $78,000 judgment after 2 years (includes 18% contractual interest + legal fees)

While Options C and D may seem attractive due to the higher amounts, the practical challenges—like delayed cash flow, legal costs, and uncertainty—make Option A the most efficient and profitable in real-world terms. Getting paid quickly, even with a modest discount, often outweighs delayed legal victories.

Legal Tools That Get You Paid Faster in Massachusetts

1. Massachusetts Mechanic’s Liens

Mechanic’s liens are powerful legal instruments for contractors and subcontractors to secure unpaid debts.

• What Is It? A mechanic’s lien allows you to claim a legal interest in the property you've worked on, forcing payment before the property can be sold or refinanced.

• When to File? Ideally, record a Notice of Contract as soon as the contract is executed. If not, you must file it within 90 days of the last work performed on the project (including work by others under the same GC).

• Next Steps: After filing the Notice of Contract, a Statement of Account must be recorded within 120 days of last work. If still unpaid, a lawsuit must be initiated within 90 days of that statement’s filing.

Mechanic’s liens tend to prompt faster action from owners because:

• They risk paying twice if they ignore the lien.

• A successful lien may lead to a court-ordered sale of the property to pay the contractor.

• Most owners will resolve a lien long before it reaches litigation.

Never voluntarily release a mechanic’s lien unless payment is secured. It’s your strongest leverage.

2. Payment Bonds on Public Projects

For public construction projects, mechanic’s liens are not applicable. That’s where payment bonds come in.

• What Is It? A payment bond is a guarantee (by a surety) that subcontractors and suppliers will be paid.

• Who Benefits? Subcontractors, sub-subs, and material suppliers.

• Timing is Key: A notice of claim must be submitted within 65 days of your last day of work. Lawsuits must be filed within one year.

• Private Projects: Payment bonds may also exist in high-end private projects, or in lieu of mechanic’s liens via a lien discharge bond.

Always verify if the bond you received is a payment bond, not a performance bond. Only the former protects your right to payment.

How Are Strong Contracts the Foundation of Fast Payment?

A well-drafted, signed contract is often the difference between a smooth payment and a prolonged dispute. Here’s what every contractor’s contract should include:

• Accurate Customer Identification: Know who you’re dealing with. Is it Dunkin’ Donuts corporate or franchisee? Contracts must reflect the legal entity responsible for payment.

• Interest & Late Fees: Include a contractual interest rate (up to 21% in Massachusetts) and reasonable late fees (typically 5%). This incentivizes timely payment and increases your potential recovery in case of default.

• Attorney’s Fees: Under Massachusetts law, legal fees can only be recovered if explicitly stated in the contract. Otherwise, you’re on the hook for your own litigation costs.

• Scope, Terms, and Payment Schedule: Clarity reduces disputes. Ensure the scope of work, timeline, milestones, and payment terms are well documented.

A solid contract can also support a successful mechanic’s lien or bond claim—even when lien rights expire, or a bond doesn’t exist.

Additional Strategies to Strengthen Your Position

1. Personal Guarantees: Have business owners sign personal guarantees, especially if the company is small or new. This gives you a second person to pursue in the event of non-payment.

2. Prompt Invoicing: Send invoices immediately after work completion. Delayed invoicing can make collections harder.

3. Follow Up Early: Begin following up at 30 days past due—not 90. Use automated reminders and collection partners if necessary.

4. Use Professionals: Partnering with experts like Sunray can simplify and speed up the lien and bond filing process. They ensure your paperwork is accurate and timely—preventing costly delays or errors.

Conclusion: Get Paid What You’re Owed, When You’re Owed It

Construction work is complex. Payment shouldn’t be. By understanding the legal tools available—like mechanic’s liens and payment bonds—and by leveraging smart contracts and proactive practices, contractors can dramatically reduce payment delays.

Faster payment means more working capital, less stress, and better business health. If you're not getting paid on time, it's time to take control.

You’re not just building projects. You’re building a business. Make sure you’re paid like it.

Common Questions Contractors Ask

1. How long is my mechanic’s lien effective?

Once you record your Notice of Contract, your mechanic’s lien is considered active and effective for the duration of the project. However, to fully preserve your lien rights, you must follow these additional steps:

• File the Statement of Account within 120 days of the last day of work on the project.

• File a lawsuit to enforce the lien within 90 days after recording the Statement of Account.

If the project is ongoing (e.g., a multi-year project), your lien remains valid as long as the project continues. Once litigation is filed and the lien is properly perfected, it remains effective until the case is resolved, regardless of how long that takes.

2. Can I amend my lien to increase the amount if I keep working on the project?

Yes, you can amend your lien, and doing so is often recommended.

There are two key documents where changes might apply:

• Notice of Contract: This identifies the total value of your contract. It can be filed even before any amount is due (e.g., on day one of the job), so it's not typically amended unless there's a major contract change.

• Statement of Account: This shows how much is currently due at the time of filing. You can and should amend this document as work progresses, change orders are approved, or balances increase—right up until you file your lawsuit.

In cases of significant new work or modifications, you might consider whether to file a new lien or amend the existing one, depending on the nature of the change.

3. If I don’t have a copy of the bond, but I have the bond number and surety info, can I still send a bond claim?

Yes. You are not required to have the full copy of the bond to send a claim, especially on public projects in Massachusetts.

As long as you:

• Correctly identify the project

• Know your place in the contractual chain (e.g., subcontractor, sub-subcontractor)

• Have the bonding company’s name and preferably the bond number

…you can submit your bond claim.

For public projects over $25,000, Massachusetts law provides standard statutory protections:

• Subcontractors must send notice within 65 days of last work

• Lawsuits must be filed within 1 year

If you’re dealing with a private project that has a bond (less common), then obtaining a copy of the bond is more important. Private bonds may contain custom terms that affect notice requirements or deadlines.

4. On a private job that is bonded, can I file a mechanic’s lien and send a bond claim?

Yes, you can pursue both— as long as the bond isn’t a mechanic’s lien discharge bond (a special bond that replaces your lien rights).

Here’s the distinction:

• A standard payment bond on a private job is a separate instrument that guarantees payment.

• A mechanic’s lien attaches to the property itself.

If both options are available to you, there’s no downside to using both. These are two different pools of money:

• The mechanic’s lien enforces payment through the property owner

• The bond claim seeks payment from the surety company

Filing both can increase your chances of being paid by involving more parties with a financial interest in resolving the claim. The cost of recording a lien is relatively low, and the benefit of leveraging more “pockets” often outweighs the administrative burden.

Always send notice to as many parties as possible—GCs, sureties, owners, etc. The broader your reach, the better your chances of resolution.