By: WBG, LLP Published: February 2014

A lien is not timely filed if the lienor performs supervision within eight months prior to the filing of a lien, but there is no construction work for the improvement of the property during that time.

On January 15, 2014, the Supreme Court issued a decision holding that a lien is not timely filed if a lienor performs supervision within eight months prior to the filing of a lien, but there is no construction for the improvement of the property during that time.[1]

In 8th Ave. Recoveries Corp. v 111 Stellar 8 Owner, LLC,[2] the plaintiff sought to foreclose on a mechanic’s lien that had been assigned to it by a general contractor after it was filed on filed on February 2, 2011.  The contract between the owner and the general contractor required the general contractor to ensure that the site was safe.  The owner established that the general contractor did not perfom any construction work for the improvement of the property after April of 2010.  However, the general contractor’s employee testified that in his role as “construction supervisor,” he had continued to go to the project site everyday between April and November of 2010 and spent the full day there.  His duties consisted of “walking around and looking at the Property.”  The general contractor had not billed for these services in its final requisition for payment, including retainage, which was dated September 2, 2010 for the period through March 26, 2010.  However, the general contractor maintained that the supervisory services were the basis for the timely filing of the lien.

After discovery was completed, the owner successfully moved for summary judgment to dismiss the complaint and vacate the lien on the basis that it was not timely filed.  The Court found that “[w]hile supervision of construction work may be the basis of a lien, where the property is not being improved, there is nothing to supervise and thus no basis for a lien.”  The decision was based upon prior case law where valid claims for supervision had been for construction work that improved the property.  The owner’s counterclaim for wilfull exaggeration of the lien was also dismissed because such a claim was precluded where the lien was found to be invalid for any other reason other than wilfull exaggeration.

Based on this decision, potential lienors should ensure that they file their liens within eight months after they have completed construction for the improvement of the property, even if they provide supervisory services at the site after they have completed construction pursuant to their contract.  Furthermore, assignees should investigate the validity of a lien before accepting its assignment. 


 

[1] The decision was rendered by the Hon. Carolyn E. Demarest, J.S.C., a justice of the Commercial Division of the Supreme Court of the State of New York, Kings County.

 

[2] 2014 WL 169764 (Table), 2014 N.Y. Slip Op. 50027(U), 42 Misc 3d 1212(A) [Kings Co. Jan. 15, 2014].

 

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