One of the most common questions that I am asked is whether a lienor may include interest or finance charges in the amount of its mechanic's lien. The answer is a very simple "yes." Lien Law Section 3 specifically authorizes a lienor to lien for the amount unpaid for the labor and materials and for the interest due thereon. Be careful though, if the contract documents did not allow you to charge interest or finance charges on past due amounts then you cannot just make up an amount and include it in the lien. On the other hand, if your contract documents allow you to charge interest or finance charges on past due amounts then the interest or finance charge is an entirely proper component of your mechanic's lien. When inserting interest provisions in your contract documents just be careful not to run afoul of New York's Usury laws.
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 vtp@kushnicklaw.com
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