New Hampshire

Lien Law Overview

New Hampshire is a mechanics lien-friendly state. While it does not regulate every aspect of the construction administration process like other states, the general rule is that mechanics liens have priority over mortgages. It is then a lender’s responsibility to properly administer and document the loan and disbursements to make sure it obtains the first lien position.

In New Hampshire, given mechanics liens can have priority over construction mortgages, section RSA 447:12-a Attachment Priority governs how to prevent the construction mortgage from losing its priority.

RSA 447:12-a Attachment Priority. – Such attachment shall have precedence and priority over any construction mortgage. For the purposes of this section, a construction mortgage shall mean any mortgage loan made for the purpose of financing the construction, repair, or alteration of any structure on the mortgaged premises where the lien secured by such attachment arises from the same construction, repair or alteration work. However, such attachment shall not be entitled to precedence as provided in this section to the extent that the mortgagee shows that the proceeds of the mortgage loan were disbursed either toward payment of invoices from or claims due subcontractors and suppliers of materials or labor for the work on the mortgaged premises, or upon receipt by the mortgagee from the mortgagor or his agent of an affidavit that the work on the mortgaged premises for which such disbursement is to be made has been completed and that the subcontractors and suppliers of materials or labor have been paid for their share of such work, or will be paid out of such disbursement. A mortgagee shall not knowingly accept a fraudulent affidavit and shall encourage and promote the practices outlined in RSA 447:12-b. Any agreement waiving the precedence provided by this section shall be enforceable only upon like showing by the mortgagee. The precedence provided by this section shall not apply to wage claims of employees working for wages under an employer-employee relationship, as defined in RSA 275:42. A mortgagor or his agent making a willfully false affidavit under this section shall be guilty of a misdemeanor if a natural person, or guilty of a felony if any other person.

New Hampshire has additional responsibilities regarding construction mortgages that should be reviewed in section 447:12-b Additional Responsibilities; Construction Mortgages of the state statute.

1. Within 10 business days of the execution of a construction mortgage, including any refinancing thereof, the mortgagor or his agent shall post in a conspicuous place on the job site for which the construction funds were secured, the name, address, and telephone number of the institution providing the construction funds.
2. Any person entitled to a lien pursuant to RSA 447:2-7 shall, within 15 business days of the posting required in paragraph I or of commencing to furnish services, materials, supplies, or other things, whichever is later, provide written notice to the institution providing the construction funds that such person is furnishing services, materials, supplies or other things. The written notice provided under this paragraph shall include the name and address of the job site. Failure to provide the notice required by this paragraph shall not alone invalidate the lien created by RSA 447:2-7.
3. At least 48 hours prior to requesting any construction mortgage requisition, the mortgagor or his agent shall post in a conspicuous place on the job site for which the construction funds were secured, the anticipated funding date for said requisition. The mortgagee shall require a copy of said notice, which shall be certified as to its posting by the mortgagor or his agent prior to disbursing any funds.
4. In the event that a written contract between the mortgagor or his agent and any person furnishing services, materials, supplies or other things shall provide that the disbursement of construction funds, a portion of which is intended to pay such person, shall be by a 2-party check, the mortgagor or his agent shall transmit a copy of such agreement to the mortgagee. Upon receipt of a copy of such written agreement, the mortgagee shall subsequently disburse funds intended in part to pay any such person only by a check made payable to the mortgagor or his agent and such person. Unless otherwise agreed by the mortgagor and mortgagee, disbursements shall be made only for actual work completed and materials consumed on the jobsite for which the construction funds were secured.

There is New Hampshire case law that provides that because a bank -among other things- failed to prove that it obtained affidavits showing work on the mortgaged premises, for which disbursement was to be made, had been completed and suppliers had been paid for their share of such work, the remainder of the bank’s mortgage was subordinate to contractor’s mechanics lien. L. M. Sullivan Co. v. Essex Broadway Sav. Bank, 117 N.H. 985, 380 A.2d 1087, 1977 N.H. LEXIS 477 (N.H. 1977).

Lien Waivers

Lien Waiver Summary

In New Hampshire does not regulate the user of lien waivers and is one of only a few statutes that allow a contractor’s lien rights to be waived by means of contract before beginning work. You should use lender-provided lien waivers to control the language and reduce the risk of language that can be added/removed by other parties supplying waivers.

Are title companies required by law to manage construction loan disbursements?

No, but title companies are insurance companies that may require -in exchange for insurance coverage – some level of control over how loan proceeds are disbursed. If they do, the lender either must comply with the title company’s demands or risk not having coverage for the loan (or try another title company, but they tend to share best practices by location/region).

Can a mechanics lien have priority over a pre-existing mortgage in New Hampshire?

Generally, a labor and materials lien has precedence and priority over any construction mortgage, except to the extent that a lender shows that proceeds of the mortgage loan were either disbursed:

• toward the payment of invoices from or claims due to contractors and suppliers of materials or labor for work on the mortgaged premises, or
• upon receipt by lender from the borrower or borrower’s agent of an affidavit that the work on the mortgaged premises for which such disbursement is to be made has been completed and that the subcontractors and suppliers of materials and labor have been paid for their share of such work, or will be paid out of such disbursement. NH RSA 447:12-a.

There is New Hampshire case law that provides that because a bank – among other things – failed to prove that it obtained affidavits showing work on the mortgaged premises, for which disbursement was to be made, had been completed and suppliers had been paid for their share of such work, the remainder of the bank’s mortgage was subordinate to contractor’s mechanic’s lien. L. M. Sullivan Co. v. Essex Broadway Sav. Bank, 117 N.H. 985, 380 A.2d 1087, 1977 N.H. LEXIS 477 (N.H. 1977).

Notice to Owner (Preliminary Lien Notifications)

Contractors, Subcontractors, and Suppliers

Notice to Owner.
The party must give written notice to the owner that they are claiming a lien on the property. This can be accomplished at two points in time:

• before providing the labor, professional design services, or materials; and
• after providing the labor, professional design services, or materials (note: providing notice after providing the labor, professional design services, or materials may reduce or eliminate the subcontractor’s lien right depending on the amount the owner has paid at the time of notice). The subcontractor or material supplier must also furnish the owner an accounting in writing of the labor, professional design services, or materials provided every 30 days after the notice.

A subcontractor who provides labor or material of $15 or more has a contract with an agent, contractor, or subcontractor of the owner, and will have a mechanics lien if he or she gives notice in writing to the owner or to the person having charge of the property that he or she must claim such lien before performing the labor or furnishing the material for which it is claimed. NH RSA 447:5.

Such notice may also be given after the labor is performed, the professional design services are provided, or the material is furnished, and said lien must be valid to the extent of the amount then due or that may thereafter become due to the contractor, agent or subcontractor of the owner. The account required under RSA 447:8 may also be given at the time said notice is given. NH RSA 447:6.

Any person giving the notices described above must, as often as once in 30 days, furnish to the owner, or person having charge of the property on which the lien is claimed, an account in writing of the labor performed, professional design services provided, or materials furnished during the 30 days; and the owner or person in charge must retain a sufficient sum of money to pay such claim, and must not be liable to the agent, contractor or subcontractor, unless the agent, contractor or subcontractor must first pay it. NH RSA 447:8.

The lien created by this process must continue for 120 days after the services are performed, or the materials, supplies, or other things are furnished, unless payment for it is previously made, and must take precedence over all prior claims except liens on account of taxes.

Notice of Completion

None, however, the state does have requirements to prevent liens from attaching to construction mortgages that should be reviewed prior to making any disbursements. See section RSA 447:12-a Attachment Priority and review the Affidavit of Work Completed that is used when making disbursements.

New Hampshire Construction Lending Documents Kit

Download the New Hampshire documents kit by filling out the form. The documents included are listed below.

Disclaimer: These forms are provided for informational purposes only and are not intended to be legal advice or establish an attorney-client relationship. They are posted ‘as is’ and we do not warrant that they are the most current version. Users of these forms should consult their legal counsel before using for their particular transaction.

Contractor Licensing

Construction contractors are not subject to licensure in New Hampshire although some professions (e.g., electricians, land surveyors, appraisers, etc.) may be required to be licensed by the Office of Professional Licensing and Certification (OPLC).

Licensing search: https://forms.nh.gov/licenseverification/

Bond: NA for construction contractors