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Can a contractor release a lien after the owner starts a willfully exaggerated lien counterclaim case in NY?

New YorkLien Releases

It seems that NY law prevents a contractor from amending a mechanic's lien downward after a willfully exaggerated lien counterclaim has been filed by an owner. What is to stop a contractor from just releasing a mechanic's lien after an owner files an exaggerated lien counterclaim? If a contractor just releases the lien, does the owner then lose the ability to collect the difference between the valid and willfully exaggerated lien amounts, as well as reasonable attorney fees?

1 reply

Sep 11, 2020

Releasing the Mechanic's Lien by itself will not affect the Owner's counterclaim. The lawsuit to foreclose on the lien, and the owner's counterclaim, would have to separately be released/dismissed as well in order to avoid any potential liability for willfully exaggerating a lien. Note that proving that a lien is willfully exaggerated can be very difficult, and if there is simply a good faith dispute over the amount of money owed for the contractor's completed work, a court is unlikely to view the lien as "willfully" exaggerated. In many lien foreclosure lawsuits, Owners will typically agree to release their counterclaim for "willful exaggeration" as long as the contractor agrees to release the lien.

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