Sunday, September 9, 2012

So what is a mechanic's lien anyway?

Under New York's Lien Law, a contractor, subcontractor, materialman or supplier can place a "mechanic's lien" against a project where labor or materials have been provided but not paid for.  In the case of private construction projects, the mechanic's lien attaches to the property itself where the project took place.  For public construction projects, the mechanic's lien attaches to the "fund" of money available for the project. Whether it is private or a public project the end result is the same: your unpaid debt is secured if the mechanic's lien is filed properly.

Once recorded, the mechanic's lien simply secures your right to payment.  It does not actually get you paid.  Of course the lien may provide you with leverage to secure payment but if not, then you have to file a lawsuit to actually "enforce" the mechanic's lien and force payment.  A mechanic's lien foreclosure action eventually allows you to sell of the property at issue and satisfy the debt you are owed from the proceeds of the sale.  Additionally, the mechanic's lien will often make it difficult (but not impossible) for the owner of the project to sell the property or obtain additional financing - thus providing the lienor with additional leverage.

Mechanic's liens are creatures of statute and must follow the Lien Law virtually to the letter.  Lien foreclosure actions are also very complex so when dealing with mechanic's liens you should always consult a professional.  Finally, remember that your deadline to file a lien can be very short.  Liens against private projects in New York must be filed within eight (8) months of the time that labor or materials are last provided.  However, if the project is a single family or two family home the lien must be recorded within 4 months.  Liens for retainage can be filed within 90 days of the time that the retainage became due.  Liens against public projects must be filed within 30 days of the time that the project was officially completed and accepted.

Vincent T. Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC.  With offices in Buffalo and Long Island Kushnick Pallaci provides legal services to the construction industry across the State of New York.

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