For Whom the Mechanic’s Lien Deadline Tolls; New York Mechanic’s Lien Extended
Did the March 20, 2020 Executive Order issued by Governor Andrew Cuomo toll the mechanic’s lien clock for lien claimants? In a recent New York Supreme Court decision, the answer is yes. The lien claimant’s lien remained valid, because the extension of lien and/or suit deadline was “extended” to account for time courts were closed/reduced due to the pandemic.
New York Lien Law
The general guidelines for mechanic’s lien rights on private commercial projects in New York are reasonably straightforward. There is no required preliminary notice, the mechanic’s lien on commercial property should be filed within 8 months from last furnishing, the lien can be extended if an extension is filed within 1 year from the date of the lien filing, and suit should be filed within 1 year from the date of the lien filing.
The hitch? Well, amid the COVID-19 pandemic, Governor Cuomo issued an Executive Order (EO):
“I hereby temporarily suspend or modify, for the period from the date of this [EO] through April 19, 2020 the following: . . . to limit court operations to essential matters during the pendency of the COVID-19 health crisis, any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding . . . is hereby tolled from the date of this executive order until April 19, 2020…”
I should note, this EO was extended beyond the April 2020 date as the pandemic progressed, which is addressed below. But, before we go further, what exactly does “toll” mean? Precisely what the court had to determine.
Did the Claimant’s Lien Lapse?
KPM Restoration (KPM) provided construction work for project owner 701 River Street Associates, LLC (Owner). Owner failed to pay KPM for materials/services provided, and KPM filed a mechanic’s lien December 9, 2019, for $229,105.25. According to the court opinion, in June 2020, a partial release of lien was filed, leaving the mechanic’s lien balance of $155,791.73.
Under normal circumstances, KPM should have filed an extension of lien or proceeded with suit to enforce its lien by December 9, 2020; it did not. Based on statute, Owner filed a motion to have KPM’s lien discharged stating KPM did not comply with the deadlines set forth in Lien Law § 17.
KPM argued the deadline was extended based on the Governor’s EO. Here’s KPM’s argument per the court opinion:
“[KPM] contends that the one-year statutory timetable for its compliance with the Lien Law requirements was tolled by Governor Andrew Cuomo’s Executive Order (“EO”) 202.8, issued on March 20, 2020, in response to the COVID-19 pandemic and which tolled commencement, filing or service deadlines of legal actions during the pandemic. Respondent notes that EO 202.8 was subsequently extended up to and until November 3, 2020, by a series of subsequent EOs… Pursuant to EO 202.72, tolling was no longer in effect as of November 4, 2020. [KPM] argues that between March 20, 2020 and November 3, 2020, 228 days passed and therefore, the tolling period extended [KPM’s] deadline to commence an action to foreclose its Lien or to further extend the Lien until July 25, 2021.”
OK, so really, what does “tolled” mean? Did the Governor’s EO actually extend KPM’s extension or suit deadline?
The court relied on a definition from an earlier legal decision “[a] toll suspends the running of the applicable period of limitation for a finite time period, in this instance, 30 days, and `[t]he period of the toll is excluded from the calculation of the time in which the [claimant] can commence an action.'”
Based on this definition, the extension deadline was not suspended, it was tolled. Because the time is tolled, it doesn’t count against the calculated deadline. This means KPM’s lien is valid.
Tolling the Lien Line
2020 was… well, it was a year of challenges and questions. As we move through 2021, we are likely to see more questions about the validity of claims, because EOs were issued throughout the country and the EOs certainly weren’t uniform. Though this claimant lucked out, I wouldn’t bank on all states following suit. Review your deadlines, review your filed documents, make sure you have all documentation in order, and consult an attorney if you have questions about the validity of your claims.