Willful Lien Exaggeration and Construction Arbitration

Reviewed September 7, 2026.

An allegation that a mechanic’s lien is exaggerated does not automatically halt arbitration or require every aspect of the dispute to be decided first by a judge. The contract, arbitration rules, claims submitted and relief requested matter.

What the appellate court has said

In Flowcon, Inc. v. Andiva LLC, 200 A.D.3d 411 (2021), the First Department enforced a broad arbitration clause incorporating construction arbitration rules. It rejected the contention that the lien-exaggeration dispute required the court to stop arbitration, compelled arbitration of counterclaims, and stayed the Lien Law counterclaims and third-party action while arbitration proceeded.

Under Lien Law § 35, an award fixing the value or price of labor and materials is conclusive between the arbitration parties in a lien foreclosure action. That does not make the award conclusive about the lien’s validity or bind everyone who was outside the arbitration.

A smaller award is not proof of intentional exaggeration

In 5 Bros., Inc. v. DCM of New York, LLC, 39 Misc. 3d 713 (2013), the court confirmed an award even though the recovery was substantially below the lien amount. A difference between the demand and award does not by itself establish willful exaggeration.

Sections 39 and 39-a address intentional exaggeration and statutory remedies. It is too broad to say that arbitrators can never consider exaggeration, or that every arbitration clause authorizes every statutory remedy. Counsel should coordinate the arbitration submission, lien preservation, court claims and any request to confirm or challenge the award.

Kushnick Pallaci PLLC assists clients throughout New York with construction arbitration and related lien disputes. Contact 631-752-7100 or vtp@kushnicklaw.com.

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