If you're a contractor, subcontractor or material supplier involved in construction projects in New York, you've probably filed a mechanic's or materialman's lien against a property when a contractor hasn't paid you for your work or materials. It's one of your most efficient and effective ways of obtaining payment, but it's not foolproof. If you don't file a lien properly and act within designated time limits, you could lose your right to use this valuable collections tool.
For a private improvement construction project, a mechanic's or materialman's lien can be filed against the property that received the benefit of your work and/or materials. While that lien is in place, the owner likely won't be able to take out any loans against the property. More importantly, the lien must be paid before the property can be sold, or paid off as part of the sale. That means that, should a general contractor fail to pay you, the property owner may be required to do so.
You can also file a public improvment lien for pulic construction projects. Such liens are filed with the public agencies financing the project and the lien is filed against the funds for the project rather than real property.
In all events, one reason some liens fail is that the contractor, subcontractor or material supplier filing the lien failed to act within the required time limits. There is a limited time to file the lien and, once it's filed, there is another limited time period during which you can prosecute your claims under the lien.
In addition, liens may fail if they do not properly name all required contractors and subcontractors.
Finally, only licensed contractors, subcontractors and material suppliers are eligible to place liens on property. However, even if you can't file a lien, you aren't completely out of luck. In New York, all funds to be paid on a project are lien trust funds which are for the benefit of those whose work and materials are used on the project.
At Todd & Levi, L.L.P., our attorneys have a great deal of knowledge about and experience in properly filing and prosecuting mechanic's and materialman's liens, recovering money from lien law trust funds, and in other techniques. We represent a wide variety of construction firms, contractors, subcontractors, suppliers and others in the construction field. Call us at 212-308-7400 for a consultation.