Pitfalls in Extending Mechanic’s Liens on Residential PropertiesJohn Caravella Esq.
April 26, 2012 — 1,155 views
A Lien (or ‘Mechanic’s Lien’) is a potentially powerful tool for contractors, architects, engineers, or suppliers of materials to secure payment for work performed ‘improving’ a property. To properly ‘perfect’ a lien claim, however, strict compliance with the nuances of the New York lien law is required, and often times there are details in the process commonly overlooked.
One such frequently misunderstood practice relates to the the extending of a mechanic’s lien in New York. For liens on private improvements, the lien is valid for one year from the date of filing. The lienor (or party filing the lien) is generally provided one year from this date to begin a legal action to ‘foreclose’ upon the lien, in a manner similar to the foreclosing of a mortgage.
A lienor facing the expiration of its one year time limit on the lien on a residential property, may not be ready to start a legal action to foreclose, or may not be interrested in starting a legal action. Mechanic’s liens in New York are extendable beyond the one year original term, but for residential properties it is more complex than just the filing of an Extention by a quicky lien company.
Pursuant to § 17 of the New York Lien Law, ‘A Lien on real property improved or to be improved with a single-family dwelling may only be extended by an order of a court of record or a judge or justice thereof.’ This distinction alone has resulted in numerous filed ‘Extensions’ being invalid, and their underlying lien rights extinguished.
The matter of Cook v. Carmen S. Pariso, Inc., relates to a contractor who sought to extend its lien on a residential property, not by obtaining a court order, but by simply filing an extension of lien at the County Clerk’s Office. It was concluded that the extension was invalid as the property was residential, improved with a single family dwelling. Likewise, the underlying lien was also found to be expired, as the court order to extend the lien was required to be signed prior to the expiration of the original lien for there to be any valid lien rights extended.
This distinction in the Lien Law is the reason why the Standard form Extension of Lien, often supplied by lien submission companies, includes directly above the signature line, the statement “This is not a lien on real property improved or to be improved with a single family dwelling.”
Although the filing of a lien may bring about payment for work performed, failure to comply with the strict nuances of the New York Lien Law may instead result in the contractor, architect, engineer or supplier who filed the lien making payments to the owner for slander of title or other legal claims.
It is good practice to consult with an attorney prior to filing a lien to confirm that your potential lien is allowed by law, the requirements for filing are followed, the amount of the lien is properly calculated, and that you have followed the steps necessary to perfect a lien in New York. Courts in New York are historically reluctant to enforce liens unless the contractor can show literal compliance with the nuances of the New York Mechanic’s Lien Law.
John Caravella Esq.
The Law Offices of John Caravella, P.C.
Mr. Caravella, a construction attorney admitted to practice in all NY and FL state courts, represents architects, contractors, sub-contractors, engineers & owners in all phases of construction. He has education & working experience in architecture.