Court Permits Petition To Extend Lien On Last Day

It is generally known throughout the construction industry that a mechanic’s lien, once filed, is good for one year from the date of its filing. Under many circumstances, a lien extension cannot be obtained by a simple filing, and must be obtained by court order (which requires the commencement of a special proceeding). Because of the wording of the statute, most contractors (and construction lawyers) often bring the proceeding well before the one year anniversary so as to be sure that the order is entered before the lien expires. Because of the vagaries of court calendars, some extensions are granted well before the expiration of the lien, effectively reducing the overall time available for the lien to be active. In the recent case of ABS Construction v Pardus, a trial court granted the extension where the special proceeding was only commenced the day before the lien expired, and the order was not entered until well after that expiration.

Background

In July of 2020, ABS Construction, Inc. performed some bathroom and kitchen renovation work in the home of Drew and Frances Pardus in Manhattan. ABS alleged that it was not fully paid, and was still owed $18,502 for its work; on February 5, 2021, ABS filed a mechanic’s lien against the Pardus’ home in that amount.

Because the lien was filed against a single family home, it could not be extended through the filing of a simple extension. Rather, the Lien Law requires that the lienor obtain a court order continuing such lien. On February 4, 2022, the day before the lien expired, ABS commenced a special proceeding to extend the lien for a period of one year. Because the court order would not be obtained the next day, ABS also requested that the Court extend the lien retroactively, so as to cover any period between the natural expiration of the lien and the entry of the court’s order. In its petition in support of the extension, ABS alleged that it had not extended or foreclosed its lien because it was attempting to resolve the matter without incurring the costs associated with either a foreclosure or a special proceeding to extend the lien.

The Parduses opposed the application to extend the lien, arguing that ABS was required to show good cause for failing to obtain the order of extension within one year of the filing of the original lien, and that it failed to do so.

Decision

The court granted ABS’s application and extended the lien. In doing so, the court held that “[t]here is no dispute that this proceeding was commenced before the subject lien expired. It is of no moment that this application was not made returnable before that date. Therefore, the court has the power to extend petitioner's lien nunc pro tunc. Contrary to respondents' contention, petitioner does not need to demonstrate good cause when the proceeding was otherwise timely brought.”

Comment

As mentioned above, general conservative practice has been that where a court order extending a lien is necessary, counsel would bring the proceeding well in advance of the expiration of the lien so as to ensure that the order extending the lien was obtained within the one year. The net effect of this practice permitted courts with less-crowded dockets to effectively reduce the overall period available to lienors. For instance, if counsel brought the proceeding eight months after the filing of the lien, and the court entered the order two months thereafter, the new expiration date of the lien is two months before its anniversary date. This reduction gets magnified in following years since following extensions of lien also need to be obtained by court order (which would likely be accomplished on a similar schedule).

The pragmatic effect of ABS Construction is that lienors and their attorneys will have more flexibility in timing their applications to extend their liens so that they get the full period of time envisioned in the Lien Law—without having to make any sacrifice to the uncertainties of a court’s docket. While it would enhance the certainty of this proposition of law if this ruling were from an appellate court and not a trial-level court, the relatively low value of the lien in ABS may deprive us of that appellate decision here. However, it will likely not be very long before we do have that appellate-level holding on the issue. In the meantime, lienors would be cautioned to consult with experienced construction counsel about how to renew their liens to be sure that they are effectively extended, and not relying on another trial-level judge determining that a demonstration of good cause is actually necessary. Or, stated more simply, don’t press your luck with statutory deadlines.

If you would like more information regarding this topic please contact Thomas H. Welby at twelby@wbgllp.com or call (914) 428-2100