How to File a New York Mechanic’s Lien
Here is a summary of the procedures to follow in recording a New York mechanic’s lien:
Pre-lien notice? In this state, believe it or not, pre-lien houses are not required for anyone, whether a general contractor, sub, or supplier.
Many people also like to give a Notice of Intent to Lien, which is a 10-day demand letter. However, although a popular form, it is not required by statute.
The effect of the lien: As is well known, a mechanic’s lien is a powerful device because it stops the sale or refinance of the property until you are paid. And you don’t have to give a copy to a title or escrow company, or even the realtor selling the property, because this will pop right up in any title search.
Who: The New York legislature has opened the doors wide open and allows a lien for almost any person who contributes labor, equipment or materials that are used, consumed or incorporated into the construction project and permanently improves same.
You have to change or improve something–not just maintenance or repair. So, in New York if you are only replacing all the florescent lighting for the hallways of an apartment complex. Replacement alone is not an improvement. But if in the process you are replacing and reinstalling some of the defective lighting boxes, it would be lienable. Or, if you are a landscape company and are simply mowing, watering or fertilizing the plant material, that is not lienable. But you can file a lien for the initial planting, installing an irrigation system or retaining walls.
Unlike a Federal Miller Act project when only 1st to 2nd tier subcontractors can file a claim, you can literally be a sub, sub, sub, sub etc. and get a New York mechanic’s lien.
But you cannot be a material supplier to another material supplier. For example, a manufacturer of material supplying it to wholesaler or supply house the supply house gets a lien because they are providing material to a contractor.
Only against the owner’s interest: The lien is against the owner’s title to the property. And if you are a sub or supplier, it is not against the general contractor’s property. For tenant improvement work, your lien is against the long-term tenant’s interest. This consists of the value of the lease and the trade fixtures. Technically, on foreclosure, the trade fixtures can be sold-off and removed from the property as long as it does not cause material damage.
Written or verbal contract: You can file a New York lien if your contract is either verbal or in writing. The statute of frauds, which requires certain contracts to be in writing, does not apply. And the Uniform Commercial Code is also inapplicable because you are providing construction services and not simply “goods.” In other words, you are providing both materials and labor. But if you are solely a material or equipment supplier, the UCC does apply and your contract or purchase order should be in writing if in excess of $500.
Big exception for residential projects: this state requires a written home improvement contract that has special provisions. If not, you may not be able to record, collect, or enforce your New York lien.
Change orders: Include in your mechanic’s lien amount all change orders or extras, whether signed or not. If you have been directed to do the work and do so, that is sufficient for your lien. As we all know, it is common for architects, construction managers and other representatives to tell you to do the work, promise to sign a change order, but it never comes. In the meantime you have performed the services and relied upon those representations. Many contracts say you do not get change order work unless reduced to writing. However, under the principles of waiver and estoppel, if you are directed to do the work and the other side refuses to sign, you can lien for that amount.
Amount of the lien: You get the amount of the labor, materials and equipment actually furnished, up to the time of the lien. But not future work you have not yet performed. So, if you have been terminated, you don’t get the balance of the contract or future lost profits, but only what you have conferred thus far.
As far as punch lists, the other side can only withhold, under industry standards, 1 and 1/2 times the actual cost to complete the work. Nothing more.
The lien amount can only be for the raw principal owed. But when you go to court with a lien foreclosure lawsuit, you also get finance charges and/or prejudgment interest as well as court costs and attorney’s fees. So your lien itself should just have the principal amount and have the phrase: “In addition, prejudgment interest, court costs, and attorney’s fees according to proof at trial.”
When to file? In New York, you must record your New York mechanic’s lien within eight months of completion of the overall project for commercial property and four months for residential. It will be extended for change orders and any additional work under your contract, no matter how small the amount. But it is not extended for warranty or call back provisions. In other words, going back and correcting work you’ve already done.
Where to file? The lien is recorded in the clerk’s office in the county where the project is located. You can hand carry it in or mail it.
Who signs? Anyone in your office can sign. National lien law has yet to find a situation in which there has been a rejection in this regard.
How to serve? In this state, you can serve the lien by certified mail. Although not required, some people after receiving back a stamped copy, follow up by sending this by regular mail proving there has been a recording.
Verified or notarized? The lien must be verified under penalty of perjury that the contents are true and accurate. And, your signature must be notarized. The notary can be in any state.
Contents: The New York statute requires that you use the correct form with the required information. If not, the lien will be invalid. That is why it important to either download one of the forms on National Lien law.com for $55 or have us prepare, file and serve for $395.
Who to serve? Serve the owner and general contractor (if you are a sub). Although not required, you can also serve other persons, including a title company or realtor selling the property.
Property subject to the lien: The lien can only be filed against private property, as opposed to public works. If you have a contract with the government, you have to make a claim against a payment bond. But New York has a special exception and allows a lien against state public projects, but it only goes against the construction funds.
Priority: Your lien will be behind any recorded mortgages. The exception is if the project is started by any contractor before the recording of a mortgage, then under the relation back theory, your later filed lien has priority over that mortgage.
Lawsuit to foreclose: Your mechanic’s lien has a limited shelf life. It will be unenforceable if you do not bring a lien foreclosure lawsuit within 1 year of recording the lien. National Lien Law can wounded and then you know last it works for you is rapid immune to boost only need a privacy how I you go by numb nuts help you with this lien foreclosure lawsuit.
To learn more about a New York mechanic’s lien, visit our YouTube New York Mechanics Lien Tutorial.