Home>Levelset Community>Legal Help>Im a sub supplying and installing windows in a co-op. Project is just a little over 50% complete and I found out GC has less money left in his contract with owners than he would need to pay me. Do I stop now and file a lien? Would owners have to pay me in total of what is left in my contract with GC or they only have to pay the balance they would have owed to GC.?
Im a sub supplying and installing windows in a co-op. Project is just a little over 50% complete and I found out GC has less money left in his contract with owners than he would need to pay me. Do I stop now and file a lien? Would owners have to pay me in total of what is left in my contract with GC or they only have to pay the balance they would have owed to GC.?
I'm sorry to hear that you've gone unpaid. As you may know, New York is an "unpaid balance" state. That means, when a mechanics lien is filed by someone other than the project's prime contractor, the mechanics lien may only be effective to the extent that payment has not been made from the owner to the prime contractor. That way, an owner won't be required to pay twice for the same work. So, in a situation where a sub-tier lien claimant knows that their contractor is not passing along payment even after they've received payment themselves, then it might be a good idea to file a mechanics lien sooner than later. However, note that New York lien law prohibits a sub-tier claimant from claiming a lien for amounts greater than what's owed and unpaid to the contractor on the whole. So, if an owner owes their contractor more than what's owed and unpaid to a subcontractor, a subcontractor's lien may still be fully effective.
Keep in mind, though - there are methods beyond the mechanics lien process for recovering payment, and these methods can be especially effective when a contractor will work with their sub to make sure payment is obtained. That may sound a little far-fetched at first, but keep in mind - a contractor doesn't want to fight off a lien claim, other legal claims, and they'll need their subs to continue to perform until the project is complete. Thus, discussing another option for securing payment might work. Some of those other options are discussed in this article: Don’t Want to File a Mechanics Lien? Here Are 5 Other Options. Plus, even if a contractor isn't exactly being reasonable, there are still other options outside of the lien process. One way to compel payment might be to send a payment demand letter that sets out specific legal actions that will be taken if the debt remains unpaid (such as breach of contract, unjust enrichment, or some other legal claim). A demand letter tends to be especially effective when sent via an attorney. Further, taking action in small claims court or resorting to litigation could always be an option too - though they can be risky, and traditional litigation can be expensive. Remember, though - prior to taking some official action, it's generally a good idea to first try and talk out the issue with the customer and the property owner. When the property owner is made aware of the payment issue, they may be able to put extra pressure on the customer to make payment. Further, merely threatening a mechanics lien claim will often go a long way toward compelling payment - especially when the lien warning is made to both the property owner as well as the customer. Again, owners are able to put additional pressure on their contractors, and when a mechanics lien filing is in play, owners will generally want to make sure their property remains free and clear of lien claims, regardless of how effective those claims might be. That idea is discussed in this article: What is a Notice of Intent to Lien?