When someone claims to have not been paid for their work or for materials supplied to a commercial construction project, filing a mechanic’s lien is one option for handling it. These liens are relatively easy to file and can force the property owner to start paying. They can also pave the way to an eventual lawsuit if that becomes necessary.
Nobody involved in commercial construction wants to file a mechanic’s lien, and they can be a major inconvenience for all parties. At the same time, they are often necessary to ensure fair compensation for one’s labor or materials. Whichever side of a mechanic’s lien you find yourself on, the goal is ultimately to resolve the matter and move forward.
The Manhattan business lawyers at Levy Goldenberg LLP are ready to serve you. We can help you with all aspects of a mechanic’s lien, including litigation and beyond to enforce the lien and receive payment. We can also help property owners have liens discharged.
The Basics of New York Mechanic’s Liens
Under the New York Lien Law, various parties including contractors, subcontractors, laborers, and material suppliers can file a mechanic’s lien on commercial property at which labor has been performed or materials delivered. The typical scenario is that an aggrieved party like a contractor either has stopped receiving payment or has started to suspect that payment will not be forthcoming. The lien, which is much easier and quicker to file than a civil lawsuit, can slow progress on the worksite and ideally force the owner to resume payment.
The dissatisfied party, known as the lienor, must file the notice of lien on a commercial project either during the progress of the work or within eight months after completion of the contract, the final performance of work under the contract, or the final furnishing of materials to the property. The lienor needs to file the lien in the clerk’s office where the commercial property is located and must include the following details with the paperwork:
- The lienor’s name, address, and relevant business details
- The name and address of the lienor’s attorney, if any
- The name of the property owner against whom the lien is filed
- The name of the person who employed the lienor or to whom materials were furnished or the identity of the party with whom a contractor or subcontractor made the contract
- The labor performed or materials supplied, and the price or value thereof
- The amount of money owed to the lienor
- The first and last dates of labor performed or materials supplied
- A detailed description of the property on which the lien is filed
The lienor must also timely file the lien in accordance with the statute. A New York construction lawyer can assist with all stages of the mechanic’s lien.
How Lienors Can Resolve a Manhattan Commercial Mechanic’s Lien
Although filing a lien is generally a last resort for contractors and others who are not being paid, they can serve a vital function of compelling the owner to step up and pay what is owed. The lienor may use one of several scenarios to accomplish this, including:
- Negotiating: The intended effect of filing a mechanic’s lien is usually to get the owner’s attention and at least force them to the negotiating table. The lienor and the owner may then discuss ways of resolving the issue, for instance by paying at least part of the outstanding balance or returning some of the materials furnished.
- Mediation: A more formal option is mediation, by which the parties will submit the dispute to a third-party mediator who can help everyone involved reach a resolution. Mediation is particularly useful if several parties have filed a lien and they do not agree who among them has priority.
- Litigation: If the property owner refuses to pay the amount claimed in the lien, then the lienor can file a lawsuit (known as a foreclosure action) to enforce the lien. The lienor generally has one year from the date the lien is filed to enforce it, although the lienor may obtain an extension of time.
- Property sale: The court overseeing the foreclosure action may force a sale of the property if it is large enough. The proceeds from the sale would then be distributed to the lienors in satisfaction of the lien.
Options for the Manhattan Property Owner to Resolve the Lien
The commercial property owner also has several options for handling the matter. Among these are:
- Payment: The simplest way to resolve the lien is to pay the outstanding amount, or negotiate payment of less than what is demanded in exchange for the lienor canceling the lien. The property owner has the right to demand an itemized statement listing the labor or materials in dispute, and this statement can form the basis of negotiations.
- Summary discharge: If the lien has a facial defect, such as incorrectly identifying the property owner or failing to properly describe the property which is liened, the owner can request a summary discharge. Have an experienced attorney review your lien before taking this step.
- File a discharge bond: The law allows the Manhattan property owner to execute a discharge bond to remove the lien from the commercial property. The mechanic’s lien then attaches to the bond until it is discharged or otherwise satisfied.
- Argue willful exaggeration: One potential defense in litigation is that the lien suffers from the lienor’s willful exaggeration, meaning that the amount of money claimed to be due was intentionally overstated. Not only may the entire lien be forfeited, but the property owner can seek attorney’s fees for defending against the lien.
- Let the lien expire: As mentioned above, the lienor generally has one year to foreclose on the lien, not counting any time extension. If the lienor fails to foreclose in the required period of time, the owner can request a discharge.
Contact Our Manhattan Commercial Construction Dispute Attorney
Liens are just one facet of the complex area of construction disputes. No matter which side of the mechanic’s lien you find yourself, you need skilled legal counsel to protect your rights and seek the most optimal outcome. Learn more about your options for resolving the lien by contacting Levy Goldenberg LLP today.