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.