Lien Law Update

An amendment to the lien law effective in August of 2011 brings a significant change to the time in which a contractor may file a mechanic's lien.  According to the strict requirements of the New York Lien Law, a contractor is required to file their lien no later than 8 months after completing their work for a private project, 4 months for a single family home, and within 30 days after completion and acceptance of a public project.  While those time frames remain, the amendment has created a new time limit specifically for retainage.  It reads: “[W]here the notice of lien is for retainage, the notice of lien may be filed within ninety days after the date the retainage was due to be released.”

Much of the support for this amendment pointed out that on many private projects, the 8 month period would run out before retainage was contractually due.  In some instances, especially for contractors whose work happens in the early stages of a large project, retainage may not be due for years after their work has been completed.  In such a circumstance, a contractor’s lien rights could expire long before retainage was due.  This amendment seeks to cure that inequity.

It must be remembered however, that this extra 90 day period relates solely to the amount owed as retainage.  It will not save a lien for other amounts owed if the applicable time period has passed.

While this amendment is seemingly beneficial to the contractor, the date upon which “retainage was due to be released” or indeed, what exactly constitutes “retainage” may oftentimes prove to be difficult determinations to make and may lead to mistakes and possible forfeiture of lien rights.  So far this new amendment has yet to be tested in the courts, but contractors should err on the side of caution and seek to file and enforce their lien rights sooner, rather than later.

This alert provides general information only.  It is not legal advice and should not be used as a substitute for review with counsel of your specific situation.