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By: Thomas H. Welby Gregory J. Spaun Published: May 2021

Court Denies Petition To Cancel Mechanic's Liens Without Address Of Lienor

We have written on more than one occasion about how powerful of a tool a mechanic’s lien can be for a contractor to secure its payment, and how that tool comes with certain responsibilities (such as providing a verified itemized statement of lien upon proper demand, and being accurate in the assertions made in the lien, among others). Another responsibility is to properly set forth the information required by Section 9 of New York’s Lien Law, which sets forth the information that it is to be included in the Notice of Lien. However, as a court recently reminded us in the case of Matter of Malbro Construction Services v Straightedge Builders, Inc.,  such requirement is not a trap for the unwary, and Section 9 should be interpreted liberally, in accordance with the purpose of the Lien Law—which is to protect the beneficial interests of lienors.

Background

Prior to 2017, petitioner Malbro Construction Services, Inc., entered into several contracts with homeowners affected by Hurricane Sandy to perform remedial work to their homes under the auspices of the New York City Build it Back program. Malbro retained the services of Straightedge Builders, Inc., as one of its subcontractors for the required work.

In August of 2017, Straightedge filed mechanic’s liens on five of the properties on which it worked as a subcontractor to Malbro. On the form Notice of Lien, the address used for Straightedge was clearly that of the attorney it used to file the liens, and not the “the business address of such firm, or corporation” that is the lienor, as is required by Section 9 of the Lien Law. Malbro commenced a special proceeding to cancel the liens based on what it characterized as the facial defect, arguing that without the lienor’s actual address, it could not serve a Demand to Foreclose under Section 59 of the Lien Law (which requires either personal service on the lienor, or service upon someone of suitable age and discretion at the lienor’s last known address). Straightedge opposed the motion, arguing that the listing of the attorney’s address was proper and, in any event, there was no prejudice because Malbro was aware of Straightedge’s address because it was on both the contract and every check sent by Malbro to Straightedge.

Decision

The court denied Malbro’s motion, holding simply that “the alleged defects in the liens [are not] fatal”. Malbro appealed, and the motion court’s order was affirmed. In doing so, the appellate court cited well settled case law that “in determining the validity of a notice of lien, the requirements of the Lien Law are ‘to be construed liberally to secure the beneficial interests and purposes thereof. A substantial compliance with its several provisions shall be sufficient for the validity of a lien and to give jurisdiction to the courts to enforce the same’”. In concluding, the appellate court held that Straightedge’s Notices of Lien complied substantially with the requirements of Section 9.

Comment

As we saw here, courts can save a mechanic’s lien with an exercise of discretion in determining that a defect was not prejudicial and the notice nevertheless “substantially complied” with the requirements of Section 9 of the Lien Law. However, the better course of action would be to review the requirements of Section 9 and, using the statute as a checklist, insert accurate information in response to all seven criteria set forth. While the common sense “it’s the address where you mailed the checks” argument ultimately prevailed here, a lot of time, effort—and money—could have been saved for the simple want of double checking the information on the lien form as it was being completed. Further, since this holding was made, essentially, as an exercise of the court’s discretion, there is no guarantee that another judge in another courtroom would exercise his or her discretion in the same manner.

 

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