Legal Question in Construction Law in New York

Re: Mechanics Liens

Yes, a lien can be filed on the contractors' say-so. You can challenge it, but its somewhat of a process. If the lien was wholly without basis, you can sue, but it'd be tough. If you pay it, it must be removed.

Please let me know if you need anything further.

Re: Mechanics Liens

Yes, he can put a mechanic's lien on without your consent but you may still be able to close on your mortgage if you negotiate with your title company and bank to give them an indemnification if the contractor forecloses on the lien.

Feel free to contact me if you have any further questions or if you require any assistance.

Kind regards,

Peter Moulinos

Re: Mechanics Liens

As the other replies have indicated, a lien can be filed simply on the contractor's say-so. Getting the lien discharged in time for a July closing can be tricky. Many title companies will not insure over a mechanic's lien, and the reasons for this approach are quite complicated. You should approach your title company NOW to start discussing the subject, because if the contractor slaps a lien on your property, he will likely time the filing with an eye to doing as much damage as possible...which means he will try to file it just before you close the takeout loan. You therefore need to get your title company lined up NOW in order to de-fang the contractor's threat.

If the title company will not insure over a lien (and unless you are a very high-net-worth individual, most of them will hesitate, even if you deposit cash security equal to double the amount of the lien) because the title company is extremely at risk for other lienors who file even after you close your transaction and after your mortgage is recorded.

The only sure way to get rid of a lien without paying it off is to file a bond. You need either to get a fidelity & surety company to guarantee the bond or you need to have two people act as your guarantors who will "justify" for at least double the amount of the bond. All this jazz is found in Section 19 of the Lien Law, and it's not an easy read.

As a practical matter, if your title company will not commit IN WRITING to insure over the lien in exchange for an escrow deposit, you will need to line up a surety bond company...and that is going to take a few months' time...even if you are worth several million dollars....because they are going to check your worth thoroughly and require security deposits.

At the same time, if the contractor files an invalid lien, you will have remedies...but they take time and might not work in time to close your permanent loan. My advice is to engage an attorney who knows the ins and outs of mechanics liens and construction law, and to do so right away, because resolving the problem will not get easier as time goes by.