When a private improvement lien is filed in New York, the entire body of the New York Lien Law is imported which establishes the rules for filing, enforcing (or foreclosing the lien) and for challenging or discharging the lien. There may often be defenses to the lien for the property owner as outlined below. For those seeking to file a valid lien, the below serves as a reminder of common issues to avoid.
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Traditionally, New York Construction Law sets separate rules of engagement for public projects (where the owner is a public entity) and those that are private construction projects (where the owner is a private individual or corporation). Given these two distinct camps, it has been easy to classify a project as either a public project or a private one. For contractors, subcontractors and suppliers, knowing which rules of engagement pertain to them is essential to avoid making costly mistakes.
Like the strings of a marionette puppet, after the completion of a New York construction project, there are various legal theories that serve as ties between the builder and the owner. For the builder, the sooner these lingering ties can be removed the less exposure they face for claims of defects. For the owners, the longer they are able to establish these connections, the longer they may have legal recourse against the builder for defects.
One topic that came up in my practice recently was a contractor’s potential exposure to liability for punitive damages under New York law. As the name suggests, punitive damages are awarded above and beyond their contract or property damages, ‘where the wrong done was aggravated by circumstances of violence, oppression, malice, fraud, … on the part of the defendant, and are intended to address the plaintiff’s mental anguish or other aggravation, to punish the defendant for its behavior.’ Black’s Law Dictionary 390 (6th Ed. 1991).
Changes are an unavoidable aspect of construction. Although thorough effort and coordination are required in preparing the original project contract, specifications and construction drawings, there will still be changes. This is why owners are provided the right to make changes to the work under a typical contract changes clause.
However, the ability for owner requested changes, even if provided in the contract, are not without limitations, restrictions, and consequences. After all, what purpose would any of the project documents, contracts and drawings serve if they were subject to constant change? What good would the contract serve if the owner could make any change(s) without consequence?
The adage that you can not get blood from a stone may have its place in the rationale of New York Lien Law. Not that you will find this term included in any of the sections of the law, but this concept of reality is reflected in the hierarchy, structure, and availability of funds in the occurrence of a construction dispute.
A Lien (or ‘Mechanic’s Lien’) is a potentially powerful tool for contractors, architects, engineers, or suppliers of materials to secure payment for work performed ‘improving’ a property. To properly ‘perfect’ a lien claim, however, strict compliance with the nuances of the New York lien law is required, and often times there are details in the process commonly overlooked.