Mechanic Liens in NY

1 year ago

In NY can you go after a GC if they have already paid the sub-contractor(our client who has not paid us in full) in full, for the full amount owed to us?

Chief Legal Officer Levelset
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One of the reasons mechanics liens are powerful tools to ensure payment is because they open up the avenues for recovery to parties other than the party with whom the lien claimant contracted directly. While the property owner(s) are always roped into a mechanics lien claim by virtue of having an interest in the lined property, other parties (such as a GC) may or may not be a necessary or proper party to a lien foreclosure lawsuit. In some states, a GC with whom the claimant had no direct contract must get a copy of the lien, and can be included in the lawsuit to enforce.

In New York, the proper parties to a lien foreclosure lawsuit are set forth by New York Consolidated Laws, Lien Law – LIE § 44. The parties who must be included in the enforcement of a private construction lien in NY are: 1) other lien claimants, 2) all parties who own the property or any part thereof; and 3) other parties with claims against the property.

The GC isn’t a party who is mandated to be included in the enforcement, and is not a party who is required to receive a copy of the lien (to the extent the claimant contracted with a party other than the GC). Since a party who was hired by the sub has no privity of contract with the GC, they may not have the ability to sue the GC for payment directly.

Note, however, that there are definitely some circumstances in which a suit against a GC directly could be successful. For example, if there was a joint-check agreement in place between the GC, sub, and sub-sub/supplier, but the GC failed to make payment via joint-check, it could give rise to liability. There may be other situations in which the GC may be liable, as well, if payment was made negligently or fraudulently somehow, for example.

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