Tuesday, May 11, 2010

How to File Mechanic's Lien in New York

There is a lot of wrong, misguided and incomplete information out there about how to file a mechanic's lien in New York. A lot of confusion results from the fact that many mechanic's lienors reside outside of New York and may simply have shipped materials to New York or worked on a project in New York. New York's lien laws, while similar to many other lien laws, are not exactly "typical." So, we come to the key question: How do I file a mechanic's lien in New York? Here is your answer:

Private Lien (Not a Single Family Home)

1. First you need to make sure that you are within your time to lien. For private projects in New York (that are not single family dwellings) you have eight (8) months to file a mechanic's lien. The time begins to run from the last time that you performed services or provided materials to the subject site. There is a lot of confusion out there about just what makes something a "commercial" project subjecting it to the eight (8) month period as opposed to the four (4) month period applied to single family dwellings. Its simple: if its a single family dwelling, regardless of any other factor, it is the four month period. It does not matter if the single family dwelling is owned by a corporation or that the single family dwelling is part of a condo or cooperative (condos and co-ops raise entirely different issues).

2. If you are okay time wise, find out who owns the property. This can be fairly simple within New York City because you can use ACRIS. If you are outside of New York City (or not confident in your ability to properly use ACRIS) a title company can tell you who the owner of the property is for a small fee.

3. Find out the legal description of the property. Normally, the section block and lot along with the address will suffice. Some upstate counties require a more in depth description (including the infamous "schedule A" description).

4. Fill out your notice of mechanic's lien with all of the information required by the Lien Law. If you are not familiar with the information that is required then you should consult with an attorney. Failure to include ALL of the necessary information in the mechanic's lien may render it facially defective and ultimately null and void. In general, the mechanic's lien must include, at least, the following terms: 1) name of the lienor; 2) the lienor's address; 3) the name of the owner of the property; 4) the name of the person/entity that hired the lienor; 5) a description of the labor and/or materials provided to the project by the lienor; 6) the total contracted value of the work; 7) the amount unpaid (the lien amount); 8) the first date when labor and materials were provided and the last date when labor and materials were provided; and 9) a description of the property to be liened.

5. Once your lien is filled out, sign the verification and serve it on everyone required (again refer to the lien law but generally you have to serve the owner, general contractor and any other subcontractor's in the chain above you).

6. Pay the filing fee (varies by county) and file your mechanic's lien and your affidavit of service of the mechanic's lien with the county clerk. The affidavit of service must show that the mechanic's lien was served no more than 5 days before the mechanic's lien was recorded and no more than 30 days after the mechanic's lien was recorded.

7. Remember that your mechanic's lien will last for 1 year if not discharged through some action by a third party (bonding, petition to cancel, etc.).

A few important things to remember: 1) do NOT wait until the day before your lien rights will expire to file your lien. In general, starting the process 10-15 days before the lien rights expired is as close as I would recommend getting to the deadline. You want to give yourself adequate time to gather the necessary information and handle any problems that may come up; 2) do NOT wait until the day before your lien expires to file an extension. Again, try to get the process rolling no less than 10-15 days before the lien expires to deal with any issues that come up; and 3) remember that your mechanic's lien in New York is not self executing. In other words, your mechanic's lien, in and of itself, does very little for you. It does not get you paid. It simply preserves your security interest in the property that you improved. If you want to enforce your mechanic's lien then you need to file a lien foreclosure action.

While filing a mechanic's lien in New York yourself is certainly possible, I highly recommend hiring an attorney to handle it for you. If there is a defect in your lien then you could risk loosing your security interest and, if the owner or contractor you provided services to is insolvent, you could be left with nothing to collect against. Most construction attorneys are able to prepare, file and serve the mechanic's lien to you for a very reasonable price.

Private Project (Single Family Dwelling)

Just about everything above that applies to a non single family home is applicable except: 1) a mechanic's lien against a single family dwelling must be filed no later than four (4) months (120 days) after you last provided labor or services at the project; and 2) you cannot extend the lien as of right. You must obtain a court order if you want to extend your mechanic's lien past the 1 year that it is valid. Keep in mind that the mechanic's lien must actually be extended before it expires so you need to start the process of obtaining a court order (in my opinion) about 60 days before it expires.  Note that when filing a mechanic's lien for "home improvement" services, you must generally have a home improvement license issued by the County where the project is located.

Public Project

Public projects are entirely different animals when it comes to filing a mechanic's lien. The biggest distinction is that you cannot file a lien against publicly owned property. You file your lien against the funds due to the general contractor from the public entity. Every public project is different in terms of who you have to serve and where. Therefore, it is highly advisable that you hire a construction attorney in New York to file your mechanic's lien against a public project. You have thirty (30) days from the time that the project is accepted by the public entity - regardless of when your work was finished - to file your mechanic's lien on a public project in New York. If you are doing, for example, site work early on, then it may be difficult for you to know when the project is ultimately accepted since you may have been gone for months or years at that point. The solution is to serve the public entity with a demand at the beginning of the project to notify you when they accept the project.

A note to our construction industry readers that do not maintain an office within the State of New York:  Recent cases have held that in order for you to file a valid mechanic's lien, your mechanic's lien must list a New York State attorney as your attorney in order for the lien to be held valid.  This only applies if you do not maintain an office within the State of New York. 

Remember, with all mechanic's liens in New York, whether public or private, once your lien rights have expired there is nothing even the most skilled construction attorney can do to reinstate them. So if you have a claim that you want to secure and you want to make sure that it is done properly the first time then you should consult with a construction attorney and pay the small fee associated with having the attorney prepare the lien for you. A small fee up front - before a problem develops - can prevent thousands of dollars in legal fees down the line.

Vincent T. Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC.  His practice focuses primarily on the area of construction law, including preparing mechanic's liens and prosecuting and defending mechanic's lien foreclosure actions.  For more information, please visit our website at http://www.nyconstructionlaw.com or contact Mr. Pallaci at vtp@nyconstructionlaw.com or (631) 752-7100.

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