Saturday, February 19, 2011

Placing a mechanic's lien on a property that is already in foreclosure

Lienors will often find out, after they have filed their mechanic's lien, that the subject property is already in foreclosure by another lienor.  When a lienor forecloses on a mechanic's lien he is required, pursuant to Lien Law Section 44, to include all other lienors in his foreclosure action.  However, if the new lienor comes in after the foreclosure action he obviously is not going to be included in the pending action.  So what does the new lienor do?

Pursuant to Lien Law Section 62, a new lienor may, upon notice to the plaintiff, seek to join the pending foreclosure action so that his lien may be determined and placed in the distribution order upon the sale of the property.  Lien Law Section 62 allows the new lienor to join the pending foreclosure action up to and including the day prior to the commencement of the foreclosure action.  The new lienor however may not join the pending action if his doing so would substantially delay the trial.

While good practice to file a lis pendens upon joining the action under Lien Law Section 62, it is not required.  Myrick v. Sleepy Hollow Lake, Inc., 89 Misc.2d 657, 392 N.Y.S.2d 229 (N.Y.Sup. Ct. 1977).  In Myrick, the Court held that the order granting the motion for new lienors to join the pending action effectively amended the original notice of pendency filed by the party that was foreclosing and, therefore, denied a motion to dismiss the new lienors liens when they failed to file a lise pendens or redocket their lien after one year. 

Notably, Lien Law Section 62 only allows mechanic's lien holders to joining a pending action, judgment lien holders, even though "lien" holders, are not allowed to join the action under Section 62 (although they may be able to seek joinder under an alternate theory).  Hurley Sand & Gravel Co., Inc. v. Italian-American Civil Rights League, Inc., 1973, 76 Misc.2d 305, 350 N.Y.S.2d 837.

Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law.  He can be reached at (631) 752-7100 or

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