The best security for payment for work performed on public projects is a c. 149, §29 payment bond and on private projects a payment bond and/or mechanic’s lien under c. 254. You must pay close attention to the strict statutory requirements and deadlines to make such claims and develop internal policies to log those deadlines to ensure that you preserve your rights.
If you miss a critical deadline for your bond and lien rights, you may still have a chance for prejudgment security through court proceedings, namely, attachment and trustee process. An attachment usually applies to real estate and/or personal property. Trustee process usually applies to funds of the debtor held by a third-party, most often a bank or creditor. These procedures are more time consuming, costly and less certain.
To obtain security by attachment or trustee process, you must proceed in court by filing a complaint seeking payment of the debt, a motion requesting an attachment or trustee process and an affidavit establishing that debt. The grant of an attachment or a trustee process is not automatic, but is subject to the broad discretion of the court. It also may be open to opposition by the debtor if the court requires notice before granting the attachment or trustee process. Even if granted by the court, you still must locate property, assets or funds in the name of the debtor which are sufficient to secure or satisfy the amount of your claim.
The affidavit filed with the court must establish that there is a reasonable likelihood that you will recover judgment, and that there is no insurance available to satisfy that judgment. A court hearing requesting an attachment can only occur after giving notice to the debtor, unless you can prove that the debtor is not subject to the court’s jurisdiction, that there is a clear danger that the debtor will convey or conceal the property if notified in advance or that there is an immediate danger that the debtor will damage or destroy that property. These are difficult standards to avoid notice and courts are very reluctant to attach property without prior notice to the defendant.
Trustee process requires the same procedural steps and legal standards as an attachment. Trustee process orders a third-party holding goods, effects or credits of the debtor, which is usually money due the debtor, to withhold enough of those goods, effects or credits to satisfy the judgment sought. Trustee process is most commonly utilized to compel a bank holding funds in the name of the debtor, to “freeze” the amount of money claimed by the defendant until there is a court adjudication to establish the debt.
Make no mistake, these alternatives require costly legal steps and offer less certainty than lien and bond claims, and like a lien or bond claim, the claimant always must prove its claim against the debtor before it obtains any benefit of the attachment or trustee process. As with all legal processes, there are numerous statutory exceptions and procedural requirements which you should always discuss with your attorney.
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