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Can a mortgage lender in NY ask for a subordination agreement from the party that placed a mechanic's lien on property?

Nyack, NY |

I own a unit in a coop that had a mechanic's lien placed on it 6 months ago. I am not sure when it will be resolved, and it's holding up my refinance.

Are subordination agreement's used/legal in New York State between mortgage lender's and a contractor's placing liens?

Is the party who placed the lien required to sign such an agreement?

My bank wants a full release of the lien before allowing me to close and unfortunately it's completely out of my control b/c the lien in on the coop for work done on the buildings and not my unit. I hoping that maybe they would accept a subordination agreement, however, I wonder if these are even legal in NY. Can I force the lender to accept this if they are?

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Attorney answers 1


There are a number of issues here so I'll try to address them all: 1) yes a lender can ask that a lienor sign a subordination agreement; 2) yes the subordination agreement would be enforceable with regards to the lienor; 3) no you cannot force the lienor to sign the subordination agreement; 4) no you cannot force the lender to accept a subordination agreement; and 5) it is very unlikely any party would agree to the subordination agreement. Typically when the lien is disputed the best way to remove it and push the refinance forward is to obtain a lien discharge bond. But if the lien is on the building and not the unit you may not be in a position to obtain the lien discharge bond.

The information provided herein is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created by this answer. You should consult with a local attorney regarding your specific situation to obtain legal advice.



Thank you. It is out of my control. The lien is on the property for work on the exterior of all the building. It's for ~200K. The managing agent said he would not get a bond. The lien was placed by a subcontractor, so it's even more out of our control, since it's between a subcontractor and contractor. Despite all this, I would like to get some information on discharge bonds to present to the board. Can you recommend companies in the Westchester Rockland area?

Vincent Thomas Pallaci

Vincent Thomas Pallaci


A lien discharge bond can be posted (typically) through one of two types of collateral: 1) cash; or 2) lien of credit. The bond must be equal to 110% of the amount of the lien. There is also a bond premium which is basically the cost for buying the bond. The bond premium defends on a number of factors but is generally 2-5% of the bond. The bond doesn't "pay" the lien. It removes it from the building. The lien then can expire or be challenged in the very same way it could have when it attached to the building. Also, if the lien was filed by a subcontractor, and the general contractor hired by the board was paid in full prior to the subcontractor's lien, then the lien is not valid and the board can challenge it in Court to get it discharged. I suggest USI for the bond. We can help with obtaining the bond and securing the discharge in the Westchester/Rockland area. Feel free to contact me or pass my information on to the board.