Understanding Mechanics' Liens How Contractors Recover Payment

Co-op and condo boards often become involved in disputes with contractors and subcontractors who perform work either on the building's common areas, or within individual apartments for a shareholder or unit owner. A mechanic's lien and lien enforcement action is the most popular and most potent remedy for contractors, subcontractors, and suppliers of materials to recover payment for services or materials supplied to a construction project, of which building owners and managers should be aware.

New York State's Lien Law is one of the most favorable to contractors. The statute provides that a licensed contractor, subcontractor or supplier of materials may file a mechanic's lien for the unpaid balance due on labor and materials provided to improve real property. This lien acts as an encumbrance upon the real property where the work took place. A mechanic's lien runs against the property, and as a result, will remain in effect despite the fact that the property may change hands.

It should be noted from the outset that a mechanic's lien does not grant a contractor an entitlement to payment. Rather, by encumbering the real property where the work occurred, a mechanic's lien provides the contractor with security and priority for the payment of the labor and services provided.

Mechanics' Liens in a Nutshell

A mechanic's lien against private property is effective from the date it is filed with the county clerk. The lien must be filed within eight months of the date the contractor last provided services or materials at the building. The contractor must commence an action to enforce the lien or must renew the lien within one year, or the lien will automatically expire. All licensed contractors, subcontractors, and providers of materials at all levels may file a mechanic's lien, even if the property owner was not aware they were on the job. In order to be eligible to file a lien, the contractor must have performed work in the nature of a "permanent improvement" at the premises. However, courts have liberally construed "permanent improvement" to include such work as, for example, installation of carpeting. In addition, the property owner must have consented to work being performed at the premises.

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7 Comments

  • Can a contractor that does work on common elements before conversion file a lien for the work on those common elements after conversion? If so, who would the owner on the lien be? Isn't the owner of the property all of the unit owners?
  • Does the NY State lien law use the term "licensed" when referring to contractors? Can you please indicate which article specifically states this.
  • I have a lien on my townhome from a contractor for a furnace. This is in NYS. I am disabled and unable to pay the lien. Is this a mechanics lien and does it ever go away in New York State? Thank you for you assistance.
  • How do I find the 2 construction liens that have been placed on my coop corporation for work done in a shareholder's apt? I have looked at all city agencies and cannot locate these liens. thank you
  • There is a lien against the coop I live in and the final approval of my refinance won't go through because of it. The bank wants it to be paid in full and discharged, or a surety bond and FNMA waiver is required. The coop won't do either. The lien is filed by a subcontractor, and the contractor has been paid. If this extend beyond my lock in date, I will have to pay a penalty. Then there's another date by which it must close or the loan will have to be reevaluated. These scenarios will cost me more money from penalties, and possibly rates going up. Can one sue or force the coop to pay for these expenses and the difference over the life time of the loan for losing the better rate?
  • Ten years ago I hired an architect to draw plans for a change in the layout of my apartment in a coop -- approximately $10,000. I paid the sum in full. After it was completed, the architect demanded another $5000 to approve the final completed job. It was not in the contract, and I did not pay. I have just been notified by the managing agent that there is some type of charge against my ownership for this amount. I have not received any notification . It is complicated by the fact that at the time, another owner, who ultimately became president of the board, asked me to pay filing fees to the managing agent (approximately $300) for his apartment at the same time I was submitting my fees to the managing agent for architectural work by the same architect. A few years later I realized the the other owner hadn't reimbursed me, and my managing agent eventually returned to me my overpayment. The other owner and I have been adversaries since and he has since led a board takeover -- I resigned from the board. I am a real estate broker in the building and I believe he is currently holding up a sale in the building based upon his animosity. Any advice?
  • I hired a contractor to perform work in my rent stabilized apartment, there were no payment schedules. as I was writing him a check towards the proposal and he had his worker packing up all his tools.....he didn't come back, so I stopped the check. can he put a lien against a rental building? they didn't hire him