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Home>Levelset Community>Legal Help>Hi Zlien Attorneys, My name is Jeff Leska and I work for a doggy day care company in Manhattan. We hired a GC to build-out a new store. The GC subcontracted to a window and door company to purchase and install our doors (subcontractor). The GC never paid the subcontractor (I'm sure you heard this before). Now the subcontractor is chasing us for the money owed to him and is threatening to place a lien on the bulding we're in. I requested a copy of the invoice from the subcontractor and it shows the GC as the Bill To on the invoice. We're a new tenant and a lien will certainly not sit well with the owner of the building. Our lease states that "If a mechanics lien is filed against the demised premises, or the building of the same forms a part, for work claimed to have been done for, or materials furnished to, Tenant, whether or not pursuant to this article, the same shall be discharged by Tenant within 45 days thereafter, at Tenant's expense, by payment or filing a bond as permitted by law". It appears that if the subcontractor files a lien against the bulding our company would be obligated to either pay the GC's obligation to the subcontractor or purchase a bond guaranteeing that the subcontractor be paid in the event he sues the GC for payment and loses. According to the paragraph in the lease it appears that if we didn't pay the invoice or purchase a bond we would be in breach of the lease (contract). Having to double-pay for the doors in order to keep the subcontractor from placing the lien on the building possibly causing our eviction or paying damages to the owner is very unfair. The invoice is for $44,000.00 so there is significant justification for the subcontractor to act to get paid and it is certainly unfair to him that he hasn't been paid but it's also unfair to involve us in a situation that is between the subcontractor and the GC. Can you guys kindly offer a suggestion as to how to handle the situation we're in? Much appreciated. Jeff Leska 212-401-3026. jleska@biscuitsandbath.com

Hi Zlien Attorneys, My name is Jeff Leska and I work for a doggy day care company in Manhattan. We hired a GC to build-out a new store. The GC subcontracted to a window and door company to purchase and install our doors (subcontractor). The GC never paid the subcontractor (I'm sure you heard this before). Now the subcontractor is chasing us for the money owed to him and is threatening to place a lien on the bulding we're in. I requested a copy of the invoice from the subcontractor and it shows the GC as the Bill To on the invoice. We're a new tenant and a lien will certainly not sit well with the owner of the building. Our lease states that "If a mechanics lien is filed against the demised premises, or the building of the same forms a part, for work claimed to have been done for, or materials furnished to, Tenant, whether or not pursuant to this article, the same shall be discharged by Tenant within 45 days thereafter, at Tenant's expense, by payment or filing a bond as permitted by law". It appears that if the subcontractor files a lien against the bulding our company would be obligated to either pay the GC's obligation to the subcontractor or purchase a bond guaranteeing that the subcontractor be paid in the event he sues the GC for payment and loses. According to the paragraph in the lease it appears that if we didn't pay the invoice or purchase a bond we would be in breach of the lease (contract). Having to double-pay for the doors in order to keep the subcontractor from placing the lien on the building possibly causing our eviction or paying damages to the owner is very unfair. The invoice is for $44,000.00 so there is significant justification for the subcontractor to act to get paid and it is certainly unfair to him that he hasn't been paid but it's also unfair to involve us in a situation that is between the subcontractor and the GC. Can you guys kindly offer a suggestion as to how to handle the situation we're in? Much appreciated. Jeff Leska 212-401-3026. jleska@biscuitsandbath.com

New YorkMechanics LienRight to Lien

My company could be in breach of lease if we don't pay the GC's obligation.

1 reply

Feb 8, 2019
I'm very sorry to hear about your situation, and you're right - unfortunately, situations where the owner pays their GC but the GC fails to pay their subcontractor happen all too often. Further, you're also right about the unfairness of it all - to both the property owner and the unpaid subcontractor, but as you'd noted, a subcontractor might not have much choice but to attempt to get paid via a lien claim. Before getting too far along, though, I should mention that I'm not able to provide advice on how to proceed or suggest any specific course of action - however, I am able to provide information that should be helpful in deciding how to proceed.

As a practical matter - it can be hard for a property owner or tenant to prevent the filing of a mechanics lien. However, going on the offensive and convincing a claimant to pursue some other action to recover their debt might work. There could be any number of reasons a New York mechanics lien would be improper, and if an owner or tenant can convince the claimant that they won't be successful in pursuing a debt via lien, the lien might be prevented.

For one, lien claims have very strict deadlines. If a New York lien claimant misses their deadline to file a lien (which is explained in detail here - New York Lien & Notice FAQs), the lien will be invalid. Further, when a New York owner or tenant has paid their prime contractor in full, and that contractor has failed to pay their subcontractor, the lien of their subcontractor will be limited exclusively to the amounts unpaid between the owner/tenant and their prime contractor based on § 4 of the New York mechanics lien statute (and further explained in this article: An Owner’s Response to Potential Subcontractor Liens. So, where a general contractor has been paid in full, but they have failed to pay their subcontractor, a subcontractor will not be able to file a valid and enforceable mechanics lien.

That's not to say that their lien claim won't be filed - typically, recorder's or clerk's offices have neither the bandwidth nor the authority to investigate each claim made. Rather, if such a lien were filed, the lien could likely be challenged and removed with relative ease (or, if the lien were bonded around, then any future claim against the mechanics lien bond could be challenged - presumably with success).

So again - if, upon investigating a threat of a lien claim, it becomes clear that a claimant's lien will be invalid or unenforceable, an owner/tenant might be able to fend off a potential lien by informing the potential claimant that the lien would be invalid. Of course, they might decide to proceed with a lien claim anyway - but offering to help a claimant attempt to recover payment from their customer might be a sign of good faith and help to avoid a lien. Further, by putting pressure on their prime contractor (by threatening legal action), an owner/tenant might be able to convince their contractor to release payment to their subcontractor.

Finally, it's worth mentioning that if a lien claim is on the horizon, reaching out to a local construction attorney might be helpful. They can help to fend off lien claims, plus they'll be able to review the circumstances and documentation and advise how best to proceed.

Further, here are some resources that may be of use: (1) New York Lien & Notice FAQs; I Just Received a Notice of Intent to Lien – What Should I Do Now?; and A Mechanics Lien Was Filed on My Property – What Do I Do Now?
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