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Place lien after property sale in NY

Property clean out completed for real estate agent. Per agent property has closed and we have not been paid. Can we place a lien after sale of property. Question 2, work was completed for a financial institution not a homeowner, does this qualify it as a commercial project thanks

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Sep 5, 2018

In cases in which a property is improved such that a mechanics lien is an allowable and proper remedy, the sale of the property generally doesn't extinguish lien rights to the extent that a valid lien right otherwise would have existed. In states with notice requirements, this means that the required notices must have been provided. In states without notice requirements, the claimant must still meet the deadline and other requirements.

In states like New York the ability to file a valid lien after the sale of the property can generally be tied to the fact that New York is an "unpaid balance" lien state. This means that any potential mechanics lien (from a party at any tier) is limited to the amount remaining unpaid from he property owner to the direct contractor. Since the property usually is not sold with funds remaining due to the direct contractor, the ability for other parties to file an enforceable lien is most often extinguished.

In the case where a contractor is contracted by someone who, while not the owner, may be an agent of the owner, this determination rests of the interpretation of whether the payment to the agent satisfies the owner's obligations. That is likely an argument that would need to be decided by a court.

New York notes that the property subject to the shortened lien filing window as a "single family dwelling." It is interestingly not defined as an owner-occupied residence. In fact, New York statutes state that:

"the term “single family dwelling” shall not include a dwelling unit which is a part of a subdivision that has been filed with a municipality in which the subdivision is located when at the time the lien is filed, such property in the subdivision is owned by the developer for purposes other than his personal residence. For purposes of this section, “developer” shall mean and include any private individual, partnership, trust or corporation which improves two or more parcels of real property with single family dwellings pursuant to a common scheme or plan."

Accordingly, it appears that when the structure itself is a single family dwelling, and is not part of a common-scheme development in which the developer owns the property for use other than his own residence, the property would be classified as a single-family dwelling subject to the shortened time requirements, irrespective of ownership (despite the fact that this doesn't seem to fit the spirit of the law).

Finally, New York is very particular that for work to qualify for mechanics lien protection, it must be with respect to a "permanent improvement." In fact, a New York court has found that the installation of solar panels wasn't adequate to qualify for mechanics lien protection because the panels could be removed. Accordingly, in addition to the above, it depends on what is meant by "clean out" if a mechanics lien right exists.

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