Legal Question in Bankruptcy in New York

Lien

Our new house is still in the construction phase. Although we had advanced money to the builder (construction loan) for each construction phase, the subcontractors were not paid by the builder. The subcontractors have filed/are filing liens against our house/property.

Our building contractor filed for bankruptcy (Chapter 11)last week. He confirmed that he is unable to finish the house.

What is our situation in regards to the liens?

The building contractor owes us money that we had paid for the next construction phase, that he even did not start. What is the right procedure to get this money back?

Thanks!


Asked on 12/10/03, 5:29 pm

2 Answers from Attorneys
Andrew Nitzberg Andrew Nitzberg & Associates

Re: Lien

This is a common problem. It happened to my uncle on a commercial project.

I was able to help.

What has happened is that the sub-contractors now have a lien on the house. A lien just like the bank!

While this is bad, it is not hopeless. The best that can happen is there are sufficient assets in the general contractor to pay the sub. I would 'oppose' the bankruptcy or make a claim on the Bankruptcy Estate as a creditor making a WAGE CLAIM. (This is important).

The worst that can happen is that the cost of your house has gone up and you will need a second mortgage to pay for it.

the only one to benefit (come out ahead) on the bankruptcy is the general contractor.

You are welcome to a consultation for no fee at my offices at 42 west 44th street, NY,NY. Please call for an appointment first (646) 591-5786.

Read more
Answered on 12/12/03, 12:03 pm
William Pinzler william M. Pinzler

Re: Lien

You are in trouble. You need a lawyer and you need to deal directly with your subcontractors. The failure of the contractors to pay the subs is no longer a defense in New York State.

Read more
Answered on 12/11/03, 8:55 am


Related Questions & Answers

More Bankruptcy Law questions and answers in New York