Timing for Mechanic's Liens on Condominium Subdivisions in New York

Our office handles all stages of construction litigation, including the filing of notices of mechanic's lien for both public and private construction projects and, ultimately, actions to foreclose on notices of mechanic's liens - and everything in-between. One of the biggest issues we come across in our practice is whether the filing of a notice of mechanic's lien is timely according to New York law.

The New York Lien Law §10 sets the amount of time a contractor¹ has to file a notice of mechanic's lien against a parcel of property for work performed in relation to a privately owned project. In general, depending on the type of project, the contractor has either four (4) or eight (8) months to file:

Notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within eight months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished; provided, however, that where the improvement is related to real property improved or to be improved with a single family dwelling, the notice of lien may be filed at any time during the progress of the work and the furnishing of the materials, or, within four months after the completion of the contract, or the final performance of the work, or the final furnishing of the materials, dating from the last item of work performed or materials furnished

When first enacted, this provision left some confusion as to how to handle subdivided property that would eventually contain single-family dwellings, including condominiums. Notably, Lien Law §10 now includes a specific carve-out with regard to such a scenario:

For purposes of this section, the term "single family dwelling" shall not include a dwelling unit which is a part of a subdivision that has been filed with a municipality in which the subdivision is located when at the time the lien is filed, such property in the subdivision is owned by the developer for purposes other than his personal residence. For purposes of this section, "developer" shall mean and include any private individual, partnership, trust or corporation which improves two or more parcels of real property with single family dwellings pursuant to a common scheme or plan.

Although this may seem to clarify the issue, it actually presents a bigger issue when it comes to the filing deadline, as it is contingent upon the status of the parcel at the time the lien is filed. For example: imagine a contractor finishes performing work/completes a contract to perform work on a subdivision (that will eventually hold single-family dwellings) that is still owned by the developer on January 1, 2015. As of the date of the last work performed, it would seem that the contractor has eight (8) months to file his notice of mechanic's lien, setting his deadline to file at August 31, 2015. Now imagine that the developer sells one of the parcels as a single family dwelling one June 1, 2015 - five (5) months after the contractor's last date of performance on the project. If the contractor attempted to file his notice of mechanic's lien on June 2, 2015, he could be too late - as of the date of the filing of the lien, the parcel could be deemed to be "related to real property improved or to be improved with a single family dwelling" setting the contractor's deadline to file to "four months after the completion of the contract, or the final performance of the work" â in this scenario, his deadline would have been April 30, 2015.

Unfortunately, this particular issue has not been adjudicated to date, so there is no official guidance on how the New York Courts might handle it. In accordance with Lien Law §19, which mandates the discharge of a lien that contains a material defect on its face, Courts have little discretion where they determine that the deadline to file a lien has elapsed. Depending on the particular circumstances of each individual case, we often advise our clients to file their notices of lien as soon as possible. When dealing with a parcel with a subdivision, it is likewise advisable to file the notice of lien before four (4) months have elapsed, so as to avoid any later issue that may arise in the timing.

If you have worked on a construction project and are considering filing a lien for nonpayment, or are defending a claim for foreclosure of a notice of mechanic's lien, contact one of our experienced litigators for more information.

¹Lien Law §3 lists "A contractor, subcontractor, laborer, materialman, landscape gardener, nurseryman or person or corporation selling fruit or ornamental trees, roses, shrubbery, vines and small fruits, who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof, or of his agent, contractor or subcontractor, and any trust fund to which benefits and wage supplements are due or payable for the benefit of such laborers" as the people or entities who may have a lien against a project for nonpayment. Courts have interpreted this widely to include other professionals who work to improve a parcel of property.