OAM Partners Obtain Summary Judgment Ruling In Favor of Mortgagee in Mechanic’s Lien Foreclosure Actions

mechanics-liensAttorneys O’Connell and Mutty obtained a summary judgment ruling in favor of their client, a private mortgagee, in which the Superior Court invalidated two mechanic’s liens on the grounds that the lienor, an engineering and surveying firm, did not have the proper consent of the owner of the property at the time that it commenced work on the liened property. By way of background, a developer retained an engineering and surveying firm to perform preliminary site development work on over 600 acres of land in northwestern Connecticut. At the time that the firm commenced work, the developer did not own the property. The mortgagee, a private lender, provided funding for the proposed development by virtue of a promissory note and mortgage.  When the development failed, the engineering firm filed two mechanic’s liens totaling over one million dollars against the property, and ultimately brought foreclosure actions. Relying on the precedent set forth in New England Sav. Bank v. Meadow Lakes Realty Co., 243 Conn. 601 (1998) and Centerbrook, Architects & Planners v. Laurel Nursing Services, Inc., 224 Conn. 580 (1993), the mortgagee moved for summary judgment on the  grounds that the mechanic’s liens were invalid because at the time that the engineering firm commenced work on the property, it did not have the consent of the owner of the property or the consent of someone with an equitable interest in the property.

The lienor did not dispute that the developer did not have title to the property at the time it commenced work on the property.  Instead, the lienor argued that the liens were still valid because the developer had an equitable interest in the property at the time that it commenced work by virtue of its purchase and sale agreement regarding the property.  In rejecting that argument, the Superior Court noted the permissive nature of the terms of the purchase and sale agreement, which granted the buyer-developer a right to withdraw from the purchase at any time in its sole discretion.  Pursuant to the rationale set forth in Centerbrook, the Superior Court held that such an option contract was not sufficient to create an equitable interest in the property that gave rise to the filing of a mechanic’s lien. Accordingly, the Superior Court ruled that both mechanic’s liens were invalid.