Liening for Pre-Construction Services? Yes and No.
Decades of cases still have not resolved the issue of what, if any, pre-construction services are lienable. Here, a court explains the general rules, but kicks the can down the road, leaving the issue still unresolved.
The Lien Law permits a contractor “who performs labor … for the improvement of real property…at the request of the owner” to file a mechanic’s lien. Even though the Lien Law is to be “constructed liberally,” does it cover pre-construction services that are performed well before any “improvement” has begun? Yes. And no.
In yet another example of a question that you’d think had been settled years ago, the answer still remains hazy. In 1929, New York’s highest court held that the act of procuring subcontractors and negotiating their subcontracts was not part of the work of improving the property and was not lienable, but the act of superintending the tearing down of the old building was. There hasn’t been much judicial guidance since then.
In 1987, some broader pre-construction tasks were found to be lienable (engineering and surveying services to obtain municipal approvals). But in 1995, another court refused to allow a lien to be filed for the procurement of bids or applications for building permits. It remained difficult to distinguish the bright line separating the lienable from the unlienable.
In the most recent case, a lien was filed for the pre-construction acts by a construction management firm consisting of (i) recommending structural systems and other changes to the design of a luxury condominium; (ii) providing finish selections; (iii) consulting with land use attorneys to prepare for Planning Board meetings; (iv) meeting with consultants; and (v) preparing construction budgets. Certainly a mixed bag. But all pre-“improvement.”
The owner moved to have the lien stricken under Lien Law section 19(6), which permits the summary discharge of a lien when it appears from the face of the lien that the claimant has no valid lien by reason of the character of the labor or materials furnished for which the lien is claimed.
The court took the easy way out. It held that “in the absence of clear case law precluding mechanic’s liens for all the types of work [the lienor] now describes, and construing the Lien Law liberally, this Court concludes that [the] lien is not entirely invalid on its face, and therefore denies the petition for summary discharge.” In other words, because there may be something in there which is lienable, we’ll allow the lien to stand for now. Down the road, at trial (if there ever is a trial), the court will figure it out.
And the reported case law remains inconclusive yet again.
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Further information on mechanic's liens can be found on our blog:
Another Mechanic's Lien Bites the Dust
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.