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Can legal fees and interest be included in the total contract amount?

New YorkConstruction ContractMechanics Lien

Our original contract states that a customer is responsible for legal fees incurred to collect a debt, as well as interest on balances over 30 days. when filing a lien, am I able to include those fees in the total contract amount?

1 reply

Feb 19, 2018
First, let's look at interest. Under § 3 of the New York mechanics lien statute, claimants may file a lien for the principal and interest of the value of the work or the agreed price. Thus, interest on unpaid amounts may be included. The statute does not designate how that interest will be calculated, but, generally speaking, it's safer to be conservative in this calculation. Regarding legal fees - unfortunately, in New York, a lien claim should be limited to the amount of unpaid labor, material and equipment supplied to the project (and, as noted above, interest may be included). Extra charges and change orders agreed to by the property owner may be included in the lien claim, but including legal fees could result in a fictitious lien - and the penalties can be severe. However, that is not to say that those amounts are unrecoverable - those sums can certainly be included in demands for payment, settlement discussions, or even in some other legal action to recover the debt. Still, a lien claim should not include those amounts. That may seem counterintuitive, but it's important to remember that mechanics lien rights arise out of statutory law - not from the terms of the contract.
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