By: Thomas S. Tripodianos Published: December 2011

Mechanic's Liens and Residential Contracting

Question. Contractor completes a project that included a completely finished basement with a bathroom. For purposes of extending a mechanic's lien without the need of a court order is this home now a de facto multiple-family dwelling despite what the certificate of occupancy states?

Answer. No.

The Contractor here was as the old adage says penny wise and pound foolish. He should have obtained a Court order or foreclosed his lien instead of attempting to file a lien extension.

Contractor filed a mechanic's lien seeking payment of the balance owed for work performed. The Contractor filed an extension of the mechanic's lien within a year of filing the original lien. The extension, states that, "this is not a lien on real property improved or to be improved with a single family dwelling."

Pursuant to Lien Law §17, a mechanic's lien expires one year after filing unless an extension is filed with the County Clerk or an action is commenced to foreclose the lien within that time and a notice of pendency is filed in connection. Further, pursuant to Lien Law §17 "a lien on real property improved or to be improved with a single family dwelling may only be extended by an order of a court of record, or a judge or justice thereof." Stated another way, where a contractor does not obtain court orders of extension, as in the instant case, the lien is subject to discharge unless the encumbered realty is not real property improved with a single family dwelling. Here no such order was obtained.

Owner states that the property was used as a single family dwelling. In addition Owner submits copies of documents such as the deed, real property transfer report, recording and endorsement cover page, and certificate of occupancy all of which categorize the property in question is a single family dwelling. Owner states, in addition, that the Contractor has not commenced an action to foreclose the mechanic's lien and that more than one year has elapsed from the filing of the initial lien. In addition, Owner contends that the extension of the lien is a nullity as the property against which it was filed is a single-family dwelling.

Contractor states that the entire project for which the Owner contracted included a completely gutted and finished basement with a bathroom and several segregated rooms. Contractor contends that, the basement was set up to be a studio apartment. Contractor claims that therefore, the property is now a de facto multiple-family dwelling, regardless of the use set forth in the Certificate of Occupancy. Contractor argues that the lien extension was proper as the Owner contracted for the conversion of a single-family dwelling into a multiple-family dwelling. Contractor urges that we should look to the use and reality of the property rather than looking at the Certificate of Occupancy.

The mechanic's lien should be discharged and canceled pursuant to Lien Law §19(2) as the Contractor failed to begin an action to foreclose the lien within one year. In addition, the lien extension filed by the Contractor should be vacated as a nullity as such lien was not obtained by Court order.

Although the Contractor states that the Owner added a basement apartment to her property there is no proof that the Owner ever made use of the basement as a rental apartment or even intended to utilize the basement as a rental apartment. Those considerations should not alter the undisputed fact that the property has at all times - even during the period of construction - been used solely for residential purposes.

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