Mechanics’ liens: Easy to file and a challenge to enforce or defend

Mechanics’ liens: Easy to file and a challenge to enforce or defend 10/20/2011COMMENTS (0) By Victor M. Metsch Your sub-contractor client has not been paid for work, labor and materials on a real estate construction job. She sends you copies of the sub-contract, a summary of the work done and the invoices. She asks you to prepare and file a mechanic’s lien. Seems simple enough - take a standard pre-prepared form, fill in the blanks and file the lien. Nothing to it! Of course, that was the easy part. Identifying possible defenses to a mechanic’s lien goes far beyond the narrow confines of the Lien Law. And defending the lien, if challenged, may give you—and your client—angina. How can anything that, at the outset, seemed so uncomplicated, become so complex, time-consuming and expensive from both a prosecution and defense vantage point? Let’s take a look at some recent decisions that sustained, vacated or otherwise adjudicated mechanic’s liens. A CHALLENGE TO ENFORCE OR DEFEND Once a mechanic’s lien is filed, an action to foreclose must be commenced before the time limit to do so expires. Then, if the property owner defends, the real action begins. For example, MCC Development Corp. v. Perla, 2011 N.Y. Slip Op. 00786 (1st Dept. Feb. 10, 2011), arose from an order granting a motion to dismiss the complaint and to discharge a mechanic’s lien. The underlying construction contract required an initial decision by the architect as a condition precedent to mediation and mandated that mediation was a condition precedent to arbitration. The causes of action for foreclosure of the mechanic’s lien arose out of the contract. Accordingly, in affirming, the First Department found that “Supreme Court correctly dismissed the complaint [and] discharged the mechanic’s lien… on the ground that plaintiff failed to satisfy the contract’s conditions precedent to commencing litigation.” EXHAUSTIVE AND EXHAUSTING The grounds to challenge a lien are exhaustive and can be exhausting. In Mahan Construction Corp. v. 373 Wythe Realty, Inc., 2011 N.Y. Slip Op. 21032 (Sup Ct. Kings Co. Feb. 4, 2011) the court (Demarest, J) addressed a motion to discharge three mechanic’s liens. The third lien was the subject of the court’s decision. The third lien in Mahan was challenged on five grounds, the last of which was that “[s]ervice of the notice of lien was insufficient[.]” The court summarily disposed of the first four grounds. However, the last objection was sustained. The lien in Mahan was “served” on the corporate owner of the real estate by posting a true copy on a conspicuous place on the property. Section 11 of the Lien Law requires that where a corporation is the owner of the property, service of the lien must be made by “leaving the same… personally” with one of several specifically-designated persons. If such a person cannot be found, service can be made by posting the notice on the property between 9 a.m. and 4 p.m., or by registered or certified mail to the corporation’s last known place of business. No evidence was supplied that service of the lien was attempted by any method other than posting. As a result, the Mahan court discharged the lien against the property “due to insufficient service of the notice of lien,” because the corporate owner was not served “by one of the three specified methods.” The court held that “[s]trict compliance with the statutory requirements is mandated and the court does not have discretion to excuse noncompliance.” The court may be called upon to determine whether the lien is facially invalid. In 8 Catherine Street, LLC v. NJC Constr., Inc., 2010 N.Y. Slip Op. 52189(U) (Sup. Ct. New York Co. Nov. 17, 2010), the court (Schoenfeld, J) addressed a motion for an order discharging a mechanic’s lien based upon claims, among others, that the lien related to work that was not done within eight months of filing and that the amount thereof was exaggerated. CONTINUE READING HERE