Contractor did work for a tenant. The tenant filed for bankruptcy. Hoping to enforce the lien rights without dealing with the bankruptcy stay. Can I just pursue the owner and not the bankrupt tenant?
1 reply
Jun 23, 2020
Generally, mechanics liens for tenant improvements are pretty limited in New York. Lien rights are available against the tenant's interest, but unless the owner was pretty involved in the project, the owner's interest cannot be liened. Levelset discusses that in great detail here: Can You File a New York Mechanics Lien When Working for a Tenant?
With that in mind: If the owner isn't liable for the lien claim, then the owner generally shouldn't be a party to the lien enforcement claim. § 24 of the New York mechanics lien statute states the following about enforcing a New York lien:
"The mechanics’ liens specified in this article may be enforced against the property specified in the notice of lien and which is subject thereto and against any person liable for the debt upon which the lien is founded, as prescribed in article three of this chapter."
So, if the lien isn't against the owner's interest, and if the owner isn't otherwise liable to pay the claim, then a lien enforcement shouldn't be brought against that owner. Instead, if the customer has gone bankrupt, then navigating the requirements of the automatic stay will likely be necessary. More on mechanics liens and bankruptcy, here: How to Protect Your Payments When Dealing with a Construction Bankruptcy.