Monday, February 25, 2013

Proof of license before recording a lien? Legislature continues to hope so.

An old "friend" has again popped up against in the New York State Assembly, just as it has every year since 2004.  While the bill has never made it out of the judiciary committee, it remains alive and well in the form of bill A04188.  Below is an excerpt from our prior posting on the last reincarnation of this bill:

As previously discussed right here, this is a very significant proposed amendment to the lien law that contractors should fight against. This proposed amendment would insert some type of language into the lien law that would allow the County Clerk to refuse to file a mechanic's lien unless it is accompanied by a certification from the County stating that the contractor (or subcontractor, etc.) is licensed to perform the work in that county. There are a number of potential problems with such an amendment. First, who will be in charge of preparing this "certification"? Will it be an expert on the county licensing laws that know when you do and when you don't need a license to perform certain services? The answer is almost certainly no. What if there is a difference of opinion between the contractor and the clerk that is issuing this certification as to whether a license is required? If the clerk refuses to accept the mechanic's lien for filing, and it is ultimately determined that the lien should have been accepted, the right to file the lien may have expired in the interim. There are a number of nuances in the licensing statutes for each county and those nuances have not yet been completely ironed out by the court systems despite extensive litigation. How is a county employee supposed to make such a determination when the statutes themselves are not clear, especially because determining applicability requires a fact specific analysis? While the problem of unlicensed contractors filings mechanic's liens is indeed a problem, it is one that the courts can address - they can vacate the mechanic's lien and if necessary award the home owner damages. The legislature should not put the life or death of a mechanic's lien in the hands of a county employee that likely would not have the knowledge (either legally or factually) to determine if a license is required for that particular work. The current system, while not perfect, works. Leave it to the attorneys and the courts to sort out who should and should not file a mechanic's liens. 

If the legislature wants to act in this area a far better choice would be to adopt severe penalties for filing a mechanic's lien if you are not licensed to perform that particular work. Such an amendment would not penalize legitimate valid claims and would, hopefully, cause unscrupulous contractors to pause before filing an improper mechanic's lien. As the lien law stands, there is really no penalty for filing a mechanic's lien if you are not licensed other than losing your mechanic's lien.

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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