In a recent New York construction law case an issue arose when a Mechanic's Liens was placed on retitled/subdivided lot. New York State Lien law Lien Law § 9 requires "that the notice of lien shall state...the property subject to the lien, with a description thereof sufficient for identification; and if in a city,..., its location by street and number, if known." This case highlights the need for an experienced attorney to draft Notice of Mechanic's Liens to avoid the potential that the lien be discharged, and further to avoid costly litigation over potentially defective liens.
HAI MING CONSTRUCTION CORP., Plaintiff, v. 258 DEVOE LLC, Defendant
2011 WL 5041802 (N.Y.Sup.)
October 19, 2011
The Supreme Court, Kings County, denied the motion by a general contractor seeking discharge of record of Notice of Mechanic's Lien, dismissal of lien foreclosure action, cancelation of the Amended Notice of Pendency, and request for costs and expenses for the action.
In HAI MING CONSTRUCTION CORP., v. 258 DEVOE LLC, defendant, 258 Devoe LLC was assigned rights under a general contractor agreement with plaintiff, Hai Ming Construction Corp. Pursuant to the agreement, plaintiff demolished and constructed three new buildings on Lot 9 (Block 2920) located at 258 Devoe Street.
On March 15, 2007, defendant requested that Lot 9 be subdivided into Lots 15 - 18 with new addresses of 260, 264, and 268 Devoe Street. On October 24, 2007, plaintiff filed a Mechanic's Lien for alleged non-payment under the general contractor agreement for the claimed amount of $386,614.48. The lien was subsequently renewed on October 17, 2008, and further extended by Notice of Pendency filed on September 29, 2009.
Defendant contended that plaintiff's lien was invalid, it toto, because it did not comply with the provisions of Lien Law § 9 since it failed to adequately describe the property. Defendant contended the lots subdivision existed as on March 15, 2007. In support, defendant referred to the New York City Department of Finance "alteration book," which reflected the subdivision into separate lots beforeplaintiff filed the lien on October 24, 2007. Plaintiff countered that the subdivision was not effective until December 5, 2008 supported by a certified copy of the Digital Tax Map which indicated the effective date was December 5, 2008.
The sole issue for the Court was whether the inclusion of the superseded Lot 9, and the omission of the new Lots 16-18 and the new street addresses of 260, 264, and 268. The Court found adequate precedent to determine that if a description that identifies the property is "in substantial compliance with the provisions of the statute sufficient to provide jurisdiction to the courts to enforce it." The Court referenced SGS Assoc., LLC v. R.A. German Constr. Corp. (15 Misc.3d 1135) where an architect and a contractor were allowed to amend their Notices of Lien when property owner filed a declaration of condominium and subdivided three lots into nine new tax lots prior to the filing of a Notice of Lien.
The Court was unconvinced by defendant's reasoning noting that while a search of the New York City Department of Finance Automated City Register Information System (ACRIS) would have shown, under a single Lot 9, a April 20, 2007, mortgage against 258, 260, 264, and 268 Devoe Street the search provided insufficient notice as to the existence of a subdivision. The Court ultimately determined that the superseded lot numbers were nevertheless sufficient to identify the property and was not fatal to the validity of the liens. A fair and liberal reading of the lien law required the finding that the description of the property was in substantial compliance with Lien Law § 9.
While the plaintiff was granted leave to amend its lien, nunc pro tunc, it is important to remember to take the time to verify information in a Notice of Mechanic's Lien, and search all available databases. Title work is easily performed by a competent lien company or attorney, and is well worth the money. As the Court pointed out a search of the proper database would have provided forewarning of the mortgage and pending address change so plaintiff could add specific language to account for these changes. This would have precluded that defendant from bringing the proceeding in the first place. Further, it is important to remember that the stakes are high because an incorrect address in your lien is usually a fatal defect that will result in the discharge of the lien.
If you would like more information on this issue or any other construction related issue, please contact Welby, Brady & Greenblatt, LLP at (914) 428-2100.