What is a Demand to Commence Suit?

What Is a Demand to Commence Suit?

We often discuss the art of preliminary notices and mechanic’s liens, rather than the litigious land mine of suit. Today we will step carefully into that minefield to discuss a case in New York where the lien claimant’s mechanic’s lien was vacated because they failed to comply with a demand to commence suit.

What is a Demand to Commence Suit?

A demand to commence suit is a notice served upon the lien claimant that requires the claimant to proceed with enforcing their claim or the lien will be vacated. Many states, like New York and Illinois, have incorporated this action into the mechanic’s lien statute.

In its simplest form:

  • Demand = request
  • Commence = start
  • Suit = an action in a court of law to enforce a claim

In Avoiding Surprise and Prejudice to Lien Claimants, attorney James T. Rohlfing explains the demand in section 34 of Illinois statute as “…a demand [that] may be served on a party asserting a lien, who must then move to foreclose his lien within 30 days or lose his right to do so – ‘fish or cut bait.’ The purpose of this section is to permit an owner, or others with an interest in real property, to force the issue of validity of a lien claim already filed, and to clear any potential cloud created by a lien against the owner’s property…important protection for owners who are troubled by unenforceable or invalid liens, allowing them to quickly and easily dispose of them with a simple notice.”

In New York, statute dictates that the lien claimant has thirty days from the date of the notice to proceed with suit or the mechanic’s lien will be vacated.

“Such notice shall require the lienor to commence an action to enforce the lien, within a time specified in the notice, not less than thirty days from the time of service, or show cause at a special term of a court of record, or at a county court, in a county in which the property is situated, at a time and place specified therein, why the notice of lien filed or the bond given should not be vacated and cancelled, or the deposit returned, as the case may be.” – Section § 59 (LIE, Article 3, §59)

Case in Point: Matter of Chauve Enters. LLC, 2016 NY Slip Op 30553 – NY Supreme Court 2016

Chauve Enterprises LLC (“Chauve”) leased commercial property from Clinton Housing Development Company (“Clinton”).  Bannister Brothers Construction, Inc. (“Bannister”) furnished to the improvement of the property.

In January 2015, Bannister filed a mechanic’s lien in the amount of $22,821, and both Chauve & Clinton were named in the lien. By September, Bannister had not moved to foreclose on the lien, so Chauve took action.

“On September 25, 2015, petitioner [Chauve] served respondent [Bannister] with notice, pursuant to Lien Law § 59, to commence an action to enforce its lien within thirty days or show cause why an order should not be entered vacating the lien.”

What did Bannister do? Well, I can tell you what they did not do – they did not respond to the notice nor did they commence suit.

“Respondent [Bannister] did not respond to the notice. Petitioner [Chauve] commenced the instant proceeding by filing its verified petition on or about December 18, 2015 seeking to vacate the lien pursuant to Lien Law § 59.”

Statute is quite clear. If the claimant does not respond to the demand or fails to proceed with suit, then the mechanic’s lien is automatically extinguished. No action = no rights. According to the Supreme Court decision:

“Under the circumstances herein, this Court finds that the lien filed by respondent [Bannister] should be vacated. Respondent [Bannister] was served with the notice to commence an action… This allowed respondent thirty days to commence an action to enforce the lien… However, respondent [Bannister] not only failed to commence any such action within thirty days, but also failed to oppose the instant motion. Thus, respondent has failed to demonstrate any reason why the lien should not be vacated.”

Takeaway

It’s important to understand that, as a claimant, you have rights to recover monies through the mechanic’s lien process. However, parties impacted by the mechanic’s lien filing also have rights. Don’t try to navigate the mechanic’s lien and suit processes without the guidance of a legal professional.

Securing your lien rights does not stop when you file the lien. You must continue to monitor deadlines and next actions and be prepared for a “next action” to be dictated by the action of another (like the owner serving you with a demand to commence suit). Pay attention or pay the price.

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