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What is a Mechanics’ Lien

For subcontractors and suppliers, mechanic’s liens serve as a way to ensure payment when a general contractor fails to meet its financial obligations.

Liens represent a legal claim against a property where a subcontractor, builder, construction company, landscaper or supplier has completed work. For example, if a craftsman builds custom cabinets for a kitchen remodeling project but is not paid by the general contractor, the craftsman can place a lien against the home to recover compensation. Liens ensure that debts to subcontractors are paid ahead of other debts if the property is foreclosed or sold.

If you’re a homeowner having work done, it’s important to understand that a lien can be placed even if you have paid the general contractor. If a supplier or subcontractor does not receive payment as agreed from the general contractor, that business legally can file a claim against your home. In some cases, homeowners are forced to pay for the work twice or even sell their homes to have a lien released.

Filing a Mechanic’s Lien

In many cases, a mechanic’s lien — also referred to as a materialmen’s lien or an artisan’s lien — is necessary for getting construction assistance on a job. A lien is active until a project is complete and all workers have received payment.

To secure a mechanic’s lien, a subcontractor must take the following steps:

  • A supplier or contractor who isn’t under direct contract with a homeowner must notify the homeowner of the work being done or supplies contributed to a project.
  • If the subcontracting or supply business does not receive payment, it must file a notice of lien in the appropriate county. The notice of lien can be filed at any time during the course of work or delivery of materials and up to four months after work is complete or materials are delivered.
  • The notice of lien must include certain information, including the name and address of the lien filer, the name of the property owner, the name of the person or business that was under contract to pay, a description of the work performed or materials delivered and the agreed-upon price, and the unpaid amount.
  • In New York, the subcontractor must pay a filing fee of $30.

The state of New York uses a variety of forms for documenting various aspects of the lien process. Your attorney can assist you with understanding and filing the proper forms.

Avoiding a Mechanic’s Lien

Homeowners can take steps to avoid a lien by ensuring that suppliers, subcontractors and other trades persons are paid. One method is writing checks jointly to the general contractor and a specific supplier or subcontractor. The check can be cashed only if both beneficiaries provide endorsement.

Another method for avoiding a lien is requiring that a general contractor secure lien waivers from any businesses the general contractor is responsible for paying. Homeowners also can choose to pay subcontractors directly and to subtract the payments from the amount owed to a general contractor. Paying directly can be tricky because a homeowner may give the appearance of acting as an employer — which could come with responsibility for withholding Social Security and income taxes, for instance. If you plan to pay directly, work with an experienced real estate attorney to protect yourself.

Homeowners should keep all paperwork and receipts — especially those that document work completed or supplies delivered — from the general contractor and other businesses and suppliers. In addition, consider following up with contractors to determine if they’ve been paid; if not, you can request waivers through your general contractor.

Consult with Experienced Attorneys

If you own a small business that works with general contractors in the East Meadow area, you must take responsibility for ensuring that you receive payment for your labor and supplies. By working with an attorney who is knowledgeable about mechanic’s liens, you take steps to protect your business and your employees.

For homeowners having work done, an experienced attorney can assist with avoiding a mechanic’s lien by ensuring that all subcontractors receive payment as agreed. The law assumes that if you are hit with a mechanic’s lien for a general contractor’s nonpayment, you can in turn sue the general contractor to recover your money. If your home is under a mechanic’s lien, it’s critical that you work with experienced legal counsel to protect your property. To schedule a consultation, please contact Gertler Law Group, LLC.