Reviewed September 7, 2026.
A privately financed development on publicly owned land can fall outside the ordinary private-property lien model. Before extending credit, determine who owns the land, who contracted for the work, how the project is financed and what payment security exists.
A lien on public funds is different from a lien on land
New York public improvement liens generally attach to applicable public money rather than the public real estate. If no public fund exists, there may be no fund to which that lien can attach. A private tenant’s involvement should not be taken as assurance that the public owner’s land or the tenant’s leasehold can be encumbered by an ordinary mechanic’s lien.
Section 5 provides a security requirement
Lien Law § 5 requires the public owner’s chief financial officer to require a bond or other undertaking securing prompt payment on a qualifying public improvement with an estimated cost over $250,000 where no public financing fund exists. The earlier version of this article omitted this important protection.
Obtain and read the actual undertaking. Verify who can claim, the payment promised, limits, claim notices, deadlines and the obligor’s ability to perform. Do not assume that every developer guaranty provides the same rights as a payment bond.
The 2018 Court of Appeals decision in Skanska also shows why contractual enforcement must be analyzed separately: it dismissed the contract claim without deciding whether the guaranty satisfied § 5.
Negotiate appropriate security and contract remedies before work starts. Public ownership does not by itself eliminate every collection remedy, but it can materially change which remedies are available.
Kushnick Pallaci PLLC assists clients throughout New York with public construction contracts and procurement. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
Vincent, this is a very good point and a very good post. This happens A LOT more often than people would think. New York seems to be unique in that it does not allow a private mechanics lien against the leasehold interest, since this seems to be the available remedy in most other states. I am currently writing a blog post on the lien blog that may have a tie-in here. The post will just give contractors and suppliers some ideas about what they can do in these circumstances, when there are no lien or bond claim rights (there are a few scenarios where this can play out). The potential solution? Get a letter of credit, personal guaranty, joint check agreement, etc.
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