Legislature proposes amendment to Lien Law Section 54 and new Lien Law Section 19-a

In an effort to protect homeowners from "unscrupulous contractors", the New York State legislature has proposed several amendments to existing law.  These amendments include changes to the General Business Law and, more importantly, changes to the Lien Law.

First, the legislature has proposed to add a new Lien Law Section 19-a.  The new section would hold home owners harmless from liens filed by subcontractors when the homeowner has paid the general contractor for work completed.  The curious thing about this proposal is that the Lien Law and interpretive case law already provide this protection.  It is well settled under New York law that a home owner is only liable to subcontractors and materialmen to the extent of contract funds remaining due and owing to the contractor.  So I question whether this amendment is even needed.

Second, the legislature has proposed to amend Lien Law Section 54 to ensure that homeowners are protected from subcontractor liens.  There is no description in the publicly available proposals as to exactly how this provides any additional protections from the proposed new Section 19-a or from the existing Lien Law and case law.

These proposed changes can been seen in Assembly Bill 105.  Notably, some version of these changes have been proposed since at least 2003 and the changes have never made it past the judiciary committee.  However, with the increased desire to protect homeowners we should still keep an eye on this to see where (if anywhere) it goes.

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