Contractors, subcontractors and material suppliers are granted by New York statute the right to file a mechanic’s lien against the realty being improved to the extent of the work and labor performed and materials furnished. A mechanic’s lien operates much like attachment and garnishment, to make sure that a subcontractor, for example, who supplies labor or materials for a construction project and does not have a contractual relationship with the owner of the property will receive the amount due to himself or herself. The mechanic’s lien secures the amount due to the subcontractor by a lien on the real property improved.
However, the rights of a subcontractor are derivative of the rights of the general contractor, and a subcontractor’s lien must be satisfied out of any monies due and owing from the owner to the general contractor at the time the lien is filed. The subcontractor cannot enforce his lien if full payment has been made by the owner to the general contractor.
In the recent case of Trofien Steel & Construction Inc. vs. Sergey Rybak, et al., the court addressed the question of monies due to the general contractor when the lien was filed
Trofien Steel & Construction, Inc., as subcontractor, entered into an agreement with Rybak Development and Construction Corp., as general contractor, to supply and install the structural steel required for a project located at 26 Highlawn Avenue, Brooklyn, New York. After the structural steel work was completed, a $135,619 balance remained due on the subcontract. In an attempt to recover the unpaid balance, the subcontractor filed a mechanic’s lien and commenced a mechanic’s lien foreclosure action against the project owner.
In defense, the owner argued that it had not contracted with the subcontractor and that if any money was due to the subcontractor, it was due from the general contractor to the subcontractor, not from the owner. The owner also argued that at the time of the subcontractor’s mechanic’s lien filing, no monies were due and owing to the general contractor. As proof, the owner submitted an affidavit from the general contractor stating that at the time the subcontractor’s mechanic’s lien filing, no money was due to the general contractor. Based on these defenses, the owner made a motion to dismiss the subcontractor’s mechanic’s lien foreclosure claim.
The court ruled in favor of the owner, dismissing the subcontractor’s lien foreclosure claim. The court first noted that an owner is not liable to a subcontractor unless the owner has agreed to pay the subcontractor. According to the court, the mere fact that an owner consents to the improvements provided by the subcontractor does not render him liable to the subcontractor, whose sole remedy lies against the general contractor.
The court went on to note that a mechanic’s lien will only attach to amounts due and owing from the owner to the general contractor at the time of the lien filing. Since the owner submitted an affidavit from the general contractor stating that no monies were due and owing to it at the time of the subcontractor’s mechanic’s lien filing, and no evidence was presented to the contrary, the court accepted the affidavit as proof that all monies properly due and owing to the general contractor had been paid at the time of the mechanic’s lien filing. Since no money was due from the owner to the general contractor at the time of the subcontractor’s lien filing, the court dismissed the subcontractor’s mechanic’s lien foreclosure claim.
Where an owner pays the general contractor in full, an owner is generally not liable to a subcontractor unless the owner otherwise agrees to pay the subcontractor. The theory is that the services performed by the subcontractor are for the benefit of the general contractor who is responsible for the completion of the improvement, not for the benefit of the owner. A mechanic’s lien filed without delay increases the likelihood that the lien will attach to monies due and owing from the owner to the general contractor. Accordingly, the prudent subcontractor or material supplier should promptly file a mechanic’s lien once it becomes clear that there is a problem with payment on the project.
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