Throughout time, circumstances arise where a homeowner feels the need to breach their contract by refusing to pay their contractor or architect for services that were already performed and/or provided. For example, perhaps a homeowner feels that the contractor’s work is not what was agreed upon or is subpar, or maybe even because the project took longer than expected to complete, so in turn, the homeowner may decide to refuse to pay the contractor for work already performed or even dispute the previously charged credit card transaction. This raises the age-old question: Is the customer truly, always right?
Perhaps a contractor has performed work on a home. The homeowner was incredibly happy with the work and detail that the contractor was executing. The client, who paid all invoices on time via credit card, decided that the project was taking longer than expected and felt entitled enough to dispute the past invoice charges that were already processed via credit card. Soon thereafter, the contractor receives a letter from his banking institution letting him know that $8,000 worth of charges has been disputed and taken from his account, leaving him at a negative banking balance. Now the contractor is left with a pile of outstanding invoices, payment for which is rightly owed to him for work performed, and the burning question of what to do now, how to be made whole again?
If you are the contractor in this situation, speaking to a construction attorney is always a great first step in recovering the monies owed to you. Most commonly, a Mechanic’s Lien can be filed against the homeowner for the refusal of payment on work that has already been completed and was done so according to the terms of the parties’ contract.
According to Cornell Law School Dictionary, a Mechanic’s Lien is defined as “a security interest that may be acquired in the property by someone who spends material or labor working on that property. A mechanic’s lien usually stays in effect until the lienholder gets paid for services provided. The failure to pay for services as agreed may allow the lien holder to keep possession of the property involved.”
Filing a Mechanic’s Lien places a significant burden on the property owner which, in turn, makes paying monies duly owed to a contractor much more attractive and likely to occur. The Mechanic’s Lien encumbers a property, resulting in the owner’s inability to sell, refinance, or transfer the property until the lien is lifted (i.e. paid or otherwise removed from the property).
Here are some interesting and helpful facts about filing a Mechanic’s Lien in New York:
- The Notice of Lien is to be filed in the clerk’s office of the same county that the property is located in at any time during the progress of the project or within eight (8) months after either the completion of the contract, last date of work performed or materials furnished, or final performance of work or final furnishing of the materials. The filing deadline is decreased to filing within four (4) months if related to a single family dwelling. Y. Lien Law §10.
2. Who has a right to file a Mechanic’s Lien? Anyone who “performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner”, such as a contractor, materialman, architect, and landscape gardener, is entitled to file a Mechanic’s Lien. Y. Lien Law §3.
- In New York, a Mechanic’s Lien shall be effective up to one (1) year after the filing of the Notice of Lien. Y. Lien Law §17.
- In New York, you may not waive the right to file or enforce a lien – any such contracts or agreements attempting to waive such a right would be made void as against public policy and would be unenforceable. Y. Lien Law §34.
In conclusion, filing a Mechanic’s Lien is a helpful tool to use when seeking payment from an unwilling property owner. Reach out to your local construction attorney first to see if filing a Mechanic’s Lien is right for you.
John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (631) 608-1346.
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