Our contractor, who was very slow on our project (about 8 months late), left our home renovation project unfinished when we refused to pay him even more money that wasn't yet due to him according to our contract.
We just learned that he has filed a lien against us, claiming we owe HIM $35,000, when he in fact never completed the project and owes us money (we have a penalty clause with a standard AIA contract).
In order to get the lien filed within the 120 days/ 4 months, the contractor falsified the date he last worked on our project or delivered materials by at least three weeks.
We spoke with an attorney who recommended we sue the contractor but told us we should expect this to cost more than we have to pay and at least $25,000. The contractor is a liar and a perjurer. What can we do?
Construction / Development Lawyer
A contractor filing a false lien is a very common problem. Unfortunately there is very little that a contractor must do in order to file a mechanic's lien. As long as the mechanic's lien is "valid on its face" it cannot be summarily discharged. In other words, if the mechanic's lien is valid on its face, you have to file a lawsuit against the contractor to challenge the lien. The attorney that you spoke to is generally correct - this has the potential to be very expensive litigation. It is not uncommon to exceed $25,000 in costs although I have seen many cases wrapped up in less than that.
There are a couple of things that you can do short of filing a lawsuit immediately: 1) serve the contractor with a Demand to Itemize pursuant to Lien Law Section 38. This will help you out in two ways. First, it will give you an itemized breakdown of what he is claiming to be due. If he really is not owed the money then this itemized list can help you out down the line. The second thing this does for you is that if he doesn't respond, it gives you an avenue to file a motion to discharge the lien. 2) serve the contractor with a Demand to Foreclose pursuant to Lien Law Section 59. This demand can be a double edged sword. The benefit is that if he does not foreclose on the mechanic's lien within 30 days of being served with the demand then you can file a motion to discharge the lien. The obvious downside is that you are challenging him to actually foreclose and pull you into costly litigation. Assuming the contractor does not properly act and respond to either the Section 38 Demand or the Section 59 Demand, you can probably get rid of the lien for anywhere from $3,500 - $5,000 with a competent construction attorney. Of course if he does properly respond then you don't get rid of the lien and the demands should run you less than $1,000 and yield information that will help you in the eventual lawsuit.
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