Every contractor should be familiar with the mechanics lien requirements of the state that they are working in. Granted, there are many different requirements and deadlines to wrap your head around. But it’s worth the time and, in the long run, the money! Many states, including New York, have excused minor deviations or mistakes under the “substantial compliance doctrine.” However, in a recent case the NY Supreme Court dismissed a lien claim because the supplier, when serving a notice of lien, failed to send it to the general contractor…even though the GC knew the lien had been filed!
The substantial compliance doctrine
When it comes to mechanics lien and notice requirements, most states are very strict. One misstep could result in a claimant losing their lien rights altogether. However, other states use a doctrine known as “substantial compliance.” Under this doctrine, minor or trivial mistakes regarding the statutory requirements may be excused if the claimant substantially complied. This doctrine is fairly prevalent – we’ve written about it before:
- Substantial Compliance & Florida Mechanics Liens
- TX Mechanics Lien Law: What is Substantial Compliance?
New York notice of lien & substantial compliance
The state of New York is presumably one of these “substantial compliance states.” Courts have interpreted the mechanics lien requirements in New York using the doctrine before.
In fact, under NY Lien Law §23, the statute states that “this article is to be construed liberally to secure the beneficial interests and purposes thereof. A substantial compliance with its several provisions shall be sufficient for the validity of a lien and to give jurisdiction to the courts to enforce the same.”
We even wrote an article discussing a 2016 case that we titled “New York Lenient on Notice Requirements.” In that case, the claimant’s notice did not include a New York business address as required. Instead, they provided their principal place of business address in Connecticut and the address of their New York attorney’s office. The court determined that the notice substantially complied with the “Content of Notice of Lien” requirements under §9 and refused to discharge the claim.
A recent case out of Suffolk County involved a NY material supplier’s lien notice. The court, in that case, wasn’t as lenient.
Supplier’s lien claim dismissed for serving notice improperly
The case in question is Maximus Supply Corp. v. M. Hiller & Sons, Inc.
Project Snapshot:
- Owner: M. Hiller & Sons, Inc. (Hiller)
- General Contractor: Mega Contracting Company (Mega)
- Subcontractor: F & T Mechanical Inc. (F & T)
- Supplier: Maximus Supply Corp. (Maximus)
F & T hired Maximus as a material supplier under a contract for roughly $112,000. Maximus provided all of the goods and materials under the contract.
Once Maximus concluded their contract, F & T never ended up paying the contract price. Subsequently, Maximus filed a Notice of Mechanics Lien in the Kings County Clerk’s Office. Maximus then served a copy of the lien on F & T and the property owner Hiller. However, a copy of the lien was never served on Mega, the general contractor.
They filed an action to enforce their lien shortly thereafter.
NY Requirements for Serving a Notice of Lien
New York’s notice requirements after filing a mechanics lien claim can be found under NY Lien Law §11-b:
“Within five days before or thirty days after filing a notice of lien […] the lienor shall serve a copy of such notice […] by certified mail on the contractor, subcontractor […] for whom he was employed or to whom he furnished materials…”
At trial, Mega argued that the lien was void and unenforceable due to the fact that a notice of the lien was never served on the GC, Mega. Maximus argued that the lien should still be valid because Mega had actual knowledge of the notice.
There were multiple conversations between Maximus and Mega where the filed lien was brought up. Even more so, Mega had bonded off the lien a little over a month after the lien was filed, clearly indicating that they were aware of the existence of the lien.
The court disagreed. F & T’s motion for summary judgment was granted, and Maximus’ mechanics lien was dismissed. Maximus appealed.
New York’s certified mail requirement is critical
On appeal, Maximus’ main argument rested on the notion that they “substantially complied” with the mechanics lien statutes. And they argued that the statutes should be liberally construed under the public policy of favoring the enforcement of mechanics liens under §23.
However, New York strictly requires actual receipt of the notice of lien to constitute proper service. Therefore, failure to comply by sending a notice to the GC by certified mail is a deviation of the mechanics lien laws of New York. Even if all the facts set forth by Maximus were correct, they failed to meet the requirements of the statute, despite the GC’s “actual knowledge” of the lien filing.
The appeals court upheld the trial court’s decision to dismiss the claim.
Don’t ignore service requirements when it comes to mechanics liens
It appears from this case and the 2016 case mentioned above, that NY courts draw the “line of leniency” what it comes to “notice requirements” and “service requirements.” Minor deviations of omissions in the actual body or content of the notice may be excusable under certain circumstances. However, when it comes to the service requirements of a lien notice, these are strictly imposed.
In any event, there’s no reason to tempt fate. New York contractors and suppliers should be well versed in the lien requirements, and follow them to a “T”. There’s no reason to miss out on an otherwise valid mechanics lien claim due to a simple mistake in service. When it comes to mechanics lien requirements, it’s better to be safe than sorry.