NEW YORK MECHANIC’S LIEN BASICS
Below is a general overview of the Who, What, When, Where, and Why related to mechanic’s liens against private property in New York.
What is a Mechanic’s Lien?
A mechanic’s lien is a security interest in someone else’s real property that is created when a certain document - often called a “Notice of Mechanic’s Lien”- is filed with the appropriate agency or court. A mechanic’s lien may be filed by a contractor, subcontractor, laborer, supplier, or design professional who was not paid in full for the work, services or materials they provided related to a construction job on the property. A mechanic’s lien enables the person or company that filed it to commence a foreclosure lawsuit to force the sale of the property so that the sale proceeds can be used to pay the debt owed.
Why File a Mechanic’s Lien?
Think of a mechanic’s lien as another way to obtain payment. If a mechanic’s lien is not filed, the person or company that is owed money could still file a lawsuit seeking payment, but they may not be able to force the sale of the property where the construction job took place.
Imagine, for instance, that a property owner hires a general contractor (GC) to build a garage on the property. Then the GC, in turn, hires a subcontractor (Sub) to perform a portion of the work. If the GC does not pay the Sub the agreed-upon price, the Sub can file a mechanic’s lien against the property, name the GC and the property owner as defendants in a foreclosure lawsuit, and potentially collect the debt from the sale of the property. However, if the Sub does not file a mechanic’s lien, the debt owed to the Sub would not be secured by the property; the Sub would have to sue the GC for breach of contract and hope that the GC has enough money to pay the debt.
A mechanic’s lien is also an effective tool in getting a party’s attention, since they are a nuisance for property owners. The mechanic’s lien appears on public property records, creates a cloud on title and encumbers the property against which it is filed. Practically speaking, this makes it highly unlikely that the property owner will be able to mortgage, refinance, or sell the property until the lien is removed.
Who May File a Mechanic’s Lien?
New York Lien Law §3 provides that a mechanic’s lien may be filed by a “contractor, subcontractor, laborer, materialman, landscape gardener, nurseryman […] who performs labor or furnishes materials for the improvement of real property.” But New York courts have expanded this list to include others who provide services for the improvement of real property, such as an architect, engineer, and surveyor.
It is important to note that if a license is required to do certain work, an unlicensed person cannot assert or foreclose on a mechanic’s lien for such work. A contractor who is unlicensed or not authorized to do business in the State of New York may not file a mechanic’s lien against a property in New York.
Where Should the Mechanic’s Lien Be Filed?
In New York, a mechanic’s lien must be filed in the clerk’s office of the county where the property is located.
When Must a Mechanic’s Lien Be Filed?
A mechanic’s lien can be filed during the course of a construction project when payment becomes due, or it can be filed after the project is completed. However, it must be filed no later than 8 months from the last day that the party asserting the lien (the lienor) performed work or furnished materials for the project. An exception is when the construction project involves a single-family residence, in which case the deadline for filing a mechanic’s lien is 4 months from the last day that services or materials were furnished by the lienor.
Once a mechanic’s lien is filed, it is generally effective for one year after its filing (unless an extension is obtained). Within that one-year period, a lawsuit seeking to enforce the mechanic’s lien must be commenced and a Notice of Pendency (a/k/a Lis Pendens) must be filed with the County Clerk – if not, the lien expires and is void.
An extension of the mechanic’s lien can be obtained by filing the appropriate paperwork with the clerk of the county in which the Notice of Mechanic’s Lien was filed. The extension must be filed within one year of the filing of the original Notice of Mechanic’s Lien. However, if the property at issue is a single-family home, the mechanic’s lien may only be extended by court order.
New York Lien Law can be complicated and daunting to navigate. While a mechanic’s lien is a valuable tool, it comes with strict requirements that must be fully understood and adhered to in order to avoid the mechanic’s lien being rendered void and unenforceable. The experienced attorneys at Nappi Klozow, LLP can help guide you through the process to ensure that all filing requirements and deadlines are met. Whether you want to enforce a mechanic’s lien, or dispute a mechanic’s lien that has been filed against you, we have the knowledge and experience to assist you.
Disclaimer: The information on this website is general information only and should not be construed to be legal advice nor the formation of an attorney/client relationship.