A subcontractor has liened the property even though the owner has paid in full for its work. The general contractor has disappeared. What should an owner do next? And will its attorneys’ fees be recoverable?
In New York, a mechanic’s lien, although filed in the county clerk’s office on the project owner’s land record, secures only to funds:
- owed to the party directly above the lienor: each tier of subcontractors, materialmen, and laborers has its own “lien fund,” and pursuit of that is its only recourse; and
- that have been approved for payment: if the owner did not by contract or change order consent to the payment sought, that dollar amount is not included in the “lien fund.”
Thus, if at the time the subcontractor filed the notice of mechanic’s lien, the owner did not owe the general contractor money for work performed, there is no fund to which the subcontractor’s lien can attach, and the lien is void. In such a case, the owner has several options under the Lien Law. It should determine whether the lien is “facially valid,” i.e., without knowing any facts, the lien, on its face, complies with the statutory requirements. If so, the owner may serve the lienor with a “Demand for Verified Statement,” which seeks detailed information about the items of labor and materials furnished and the terms of the subcontract under which they were furnished. If the lienor fails to provide a responsive statement within five days, the statute sets up a path by which the owner can seek cancellation of the lien in a summary proceeding. If the lienor does timely respond, then with the information provided by the subcontractor, an owner can verify the lienor’s claim.
Continue Reading An Unfounded Lien: What’s an Owner to Do? And Can it Recover its Attorneys’ Fees?