Another Mechanic’s Lien Bites the Dust
Contractors providing labor, materials, and equipment to a construction project are usually confident in their ability to file a mechanic’s lien if they do not get paid. But not everyone can file a lien, and not everything is lienable.
In a recent case in New York County, a company was hired by a project owner to supply, install and remotely monitor a Real Time Vibration Monitoring System on the building being improved and on the neighboring building. When the project was complete, the company and the owner got into a dispute over the company’s invoice for $92,867. After agreeing to revisit its invoice, the company sent a revised invoice for $99,617 and, for added measure, filed a mechanic’s lien in the increased amount. The owner challenged the lien in court.
The court held that the company was not a proper lienor and the services provided were not lienable.
The company was not considered to be a “material man” as defined in the Lien Law because it did not furnish machinery, tools, or equipment “in the prosecution of [the] improvement to the property.” Although the monitoring system might have been valuable, it did not directly relate to the performance of the contract or increase the property’s value.
As for the services, the court noted that although rental equipment can often be lienable, the equipment must be directly related to the improvement of the property. It must be part of a “permanent improvement.” Since the monitoring services were neither permanent (the company removed its monitors and took them back to its office) nor did they permanently improve the property, they were not lienable.
Here, the company still had a remedy for breach of contract since it had a direct contractual relationship with the owner. But it lost its lien against the premises as added security. This serves as a reminder that there are many things utilized in a project which, because they are not permanent improvements (such as throw rugs, window treatments, guard services), cannot form the basis for a mechanic’s lien.
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Further information on mechanic's liens can be found on our blog:
Liening for Pre-Construction Services? Yes and No.
Better Early Than Never: Can You File a Mechanic's Lien too Soon?
What Can You Lien For? And What Not?
You Must Renew a Bonded Lien, Or Else
Willful Exaggeration of a Mechanic's Lien - Only Established at Trial
Filing a Mechanic's Lien. Again. And Again.