Just this morning a letter appeared on my desk from a general contractor who claims a subcontractor’s mechanics lien is “exaggerated;” meaning it claims to be owed way more money than actually owed. This is a really common occurrence in the mechanics lien world. One party claims to be owed X, and the other parties (owner & general) claim that the amount is far less than that. Argument ensues.
Whenever a general contractor or property owner disputes the value of a mechanics lien claim, the first thing they want to do is dispute the lien’s validity. In other words, they want to file a motion or action with the court challenging that the lien is excessive or exaggerated.
In the past, I talked about how difficult these arguments are to make. When you move to have a mechanics lien invalidated, you typically need a fantastic reason that’s hard to argue with. Whenever someone can argue about the lien’s validity, court’s usually require a full-fledged legal proceeding (trial, jury and all) to determine the issues, and will not take up the issues on a summary lien invalidity motion.
This was reiterated last month in a New York appeals decision, CPN Mech., Inc. v. Madison Park Owner, LLC. In that case, there was a dispute about the validity of a mechanics lien, whereby the property owner tried to convince the court that the claimant had “willfully exaggerated” the lien claim. While the proceedings may eventually find that the lien was wilfully exaggerated, that was something that required a trial, and not something to be decided summarily:
There are factual issues that preclude a determination on this record of the bona fides of the lien and its amount which also preclude summary judgment on Madison Park Owner’s counterclaim for wilful exaggeration of the lien.