You didn’t get paid and your friend told you to file a mechanic’s lien right? You think “easy enough.” But what kind of lien do you have to file? Filing the wrong type of lien provides no security and will be nothing more than a waste of your time and money.
Private Improvement Lien: A mechanic’s lien for a private project is known as a private improvement lien. A private improvement lien is recorded against the real property where the construction project was performed.
Public Improvement Lien: A mechanic’s lien on a public project is known and a lien on account of public improvement. A public improvement lien is recorded against the “lien fund” which is most simply described as the fund of money due and owing from the public owner to the prime contractor. For that reason, a prime contractor that has a contract directly with a public entity cannot file a public improvement lien.
Retainage Lien: A mechanic’s lien for retainage only is a relatively new concept in New York and is rarely used. It was created to combat the common situation where retainage did not become due until after a contractor’s lien rights expired. So the legislature created the retainage only lien which allows a supplier of labor or materials to file a mechanic’s lien for “retainage only” within 90 days of the time that the retainage became due.
Filing the correct type of lien is vital to your ability to use the lien and actually get paid. A public improvement lien cannot be converted to a private improvement lien and a private improvement lien cannot be converted to a public improvement lien. Because lien deadlines are fixed and cannot be extended by a Court, if you file the wrong type of lien and your time to file a lien expires you will be left exposed with no lien rights to protect your ability to collect payment.
About the Author: Vincent T. Pallaci is the president of NY Lien Masters, Inc. and is a practicing attorney in New York. He is the managing member of Kushnick Pallaci PLLC where his practice concentrates on construction law including issues with mechanic’s liens.