Can a Subcontractor in New York File a Lien After I Paid the Contractor in Full?
Full Question:
Answer:
A subcontractor has a lien against real property for work done. Lien Law sec 3.
Contractual privity between the owner and the subcontractor is not required. A requirement of privity would destroy any lien a subcontractor would otherwise acquire, since subcontractors are generally hired by general contractors not owners.
However a subcontractor's right to a lien is limited to the amounts remaining to be paid on the contract between the owner and the general contractor. Lien Law sec 4(1). Because the general contractor is required to hold payments from the owner in trust for his subcontractors and materialmen, see generally Lien Law Article 3A, the owner's payment in full to the general contractor constitutes a defense to the subcontractor's mechanic's lien. The subcontractor's recourse is against the general contractor for breach of trust pursuant to Article 3A.
Please see the following NY statute:
§ 4 Lien. Extent of lien.
(1) Such lien shall extend to the owner's right, title or interest in
the real property and improvements, existing at the time of filing the
notice of lien, or thereafter acquired, except as hereinafter in this
article provided. If an owner assigns his interest in such real property
by a general assignment for the benefit of creditors, within thirty days
prior to such filing, the lien shall extend to the interest thus
assigned. If any part of the real property subjected to such lien be
removed by the owner or by any other person, at any time before the
discharge thereof, such removal shall not affect the rights of the
lienor, either in respect to the remaining real property, or the part so
removed. If labor is performed for, or materials furnished to, a
contractor or subcontractor for an improvement, the lien shall not be for
a sum greater than the sum earned and unpaid on the contract at the time
of filing the notice of lien, and any sum subsequently earned thereon. In
no case shall the owner be liable to pay by reason of all liens created
pursuant to this article a sum greater than the value or agreed price of
the labor and materials remaining unpaid, at the time of filing notices
of such liens, except as hereinafter provided. (2) Such lien shall not
extend to the owner's right, title or interest in real property and
improvements, existing at the time of filing the notice of lien if such
lien arises from the failure of a lessee of the right to explore, develop
or produce natural gas or oil, to pay for, compensate or render value for
improvements made with the consent or at the request of such lessee by a
contractor, subcontractor, materialman, equipment operator or owner,
landscaper, nurseryman, or person or corporation who performs labor or
furnishes materials for the exploration, development, or production of
oil or natural gas or otherwise improves such leased property. Such lien
shall extend to the improvements made for the exploration, development
and production of oil and natural gas, and the working interest held by a
lessee of the right to explore, develop or produce oil and natural gas.
(3) Notwithstanding subdivision two if a property owner is also a
developer of oil and gas resources and is a party to an agreement with a
person or firm authorized to perfect a lien arising out of the failure of
such developer to compensate or render value for improvements to the
property upon which an oil or gas well is drilled or established, the lien
shall extend to the owners' right or interest in such real property.
