Can a New York Mechanics Lien Be Filed Too Early

Can a New York Mechanics Lien Be Filed Too Early?

A case recently presented to the Supreme Court of New York County questioned whether the claimant’s lien was served too soon. The Supreme Court reviewed and found the lien was not served too soon & the claimant’s lien would remain valid. But, what’s “too soon” in New York?

New York Mechanic’s Lien Statute 1996

To add some perspective, let’s take a moment to discuss the 1996 statute change for New York. I pulled a copy of the legislation from the New York State Archives, and the Memorandum in Support of Legislation recommended the lien law be amended to accommodate liens served within 5 days before filing the lien.

At the time, NY statute dictated a lien claimant should serve a copy of its lien within 30 days after the filing of the lien. In his recommendation to the governor, Mr. Kemp Hannon advised the statute was “unduly burdensome” and the new legislation would “provide lien holders with greater flexibility for serving a notice of lien, while simultaneously ensuring that persons receive reasonable notice of the lien.”

How was the statute “unduly burdensome?” According to Hannon’s recommendation:  “In an effort to comply with the service requirements of the lien law, some lien holders ultimately serve a notice of lien on the day of or immediately before filing. Under these circumstances, the lien is invalid and the lien holder must re-serve and re-file the notice of lien.”

Essentially, making a claimant wait to serve a copy of the lien until after the lien was filed was too restrictive, and in some cases, it caused claimants to double up on their lien filing efforts.

New York Mechanic’s Lien Statute Today

Ultimately, the legislation passed. NY Lien Law changed from “…[W]ithin 30 days of the filing of the notice of lien, the lienor shall serve a copy of the notice of lien upon the owner.” to “Within five days before or thirty days after filing the notice of lien, the lienor shall serve a copy of such notice upon the owner…” (NY LIE Article 2, Sec. 11)

For commercial projects, the mechanic’s lien should be filed within 8 months from the date of last furnishing. The claimant should serve a copy of the lien upon the owner, the prime contractor & the contracted party within 5 days before or 30 days after the filing of the lien. Also, the claimant should file a proof of service with the County Clerk within 35 days after the lien is filed.

What if the Claimant Serves the Lien 10 Days Before Filing?

In “K”-Detailing, Inc. v. N & C Ironworks, Inc., 2018 NY Slip Op 30500 – NY: Supreme Court 2018, the lien claimant “K”-Detailing, Inc. (“K”), served a copy of its mechanics lien June 28, 2016 and then filed said lien July 8, 2016.

The GC & Owner contested the lien, claiming it to be invalid because the claimant served a copy of the lien 10 days before filing the lien; obviously more than the 5 days outlined within New York’s statute. The GC & Owner petitioned to have the lien vacated, based on claimant’s failure to comply with statute.

“K” cited other legal decisions where liens remained valid, even though the liens were served earlier than 5 days prior to filing.

The Supreme Court sided with “K” —

“…the Lien Law was amended in 1996 to allow service of the lien prior to filing the lien because it was a reasonable practice designed to foster prompt notice. The Court finds that serving notice of the lien ten days prior to filing does not merit a dismissal based on this legislative history because the purpose of amending the Lien Law was to ensure that owners get timely notice of a lien.”

The Supreme Court cited 2 precedents, one where the lien was served 6 days before filing & another where the lien was filed 13 days before filing. In both cases, the courts determined that early service did not cause harm to the defendants.

The Supreme Court further added that within statute and the changes made in 1996, “…there is no discussion about why service of the lien five days prior to filing is permissible but longer periods, such as ten or twenty days before, are not appropriate. The focus of the legislation was to allow ‘a brief period so as to still be reasonably contemporary with the filing’.”

Thus, “The Court is unable to find that serving notice of the lien 10 days early (or five days earlier than provided for in the statute) frustrates the goal of service that is reasonably contemporary with filing of the lien. And the fact is that courts looking at this issue have permitted service of lien earlier than five days prior to its filing and the Moving Defendants have not demonstrated that they suffered any prejudice from the early notice.”

What Should You Do?

As a best practice, adhere to statute. In this case, statute says “Within five days before or thirty days after filing the notice of lien, the lienor shall serve a copy of such notice upon the owner…” However, if you find yourself in a situation where the area is a bit gray, consult an expert as soon as possible!

Most Recent Resources

Blog

Will Safe Harbor Ever Exist for Florida UCC Filings? Zero Tolerance

Safe Harbor couldn't save this UCC. Florida's 'zero tolerance' policy means you must strictly comply with Article 9-503(a). Learn more here!
Read More
white paper
White Paper

NCS Credit Lien Index 2022 Q3

The Lien Index increased 4 points in Q3 2022, an 11% climb over Q2 2022. As expected, Q3 mechanic's lien activity rose 11% over Q2, and activity remained lower than Q1, which peaked at 43. We anticipate the Index will increase 2%-5% in Q4. Download the full report for details.

Read More
live webinars
Live Webinar

Understanding Lien Waivers

Lien Waivers generate a “check & balance” system for project payments in exchange for work or material provided. Does your company have a solid understanding of the basics of lien waivers?
Read More