Reviewed September 7, 2026.
Privately financed construction on publicly owned land requires special attention to payment security. Lien Law § 5 requires the public owner’s chief financial officer to require a bond or other payment undertaking for a qualifying public improvement costing more than $250,000 where no public financing fund exists.
The later appeal matters
The First Department’s 2016 Skanska decision concluded that the guaranty at issue satisfied the statute, over a dissent. The story did not end there.
In Skanska USA Building Inc. v. Atlantic Yards B2 Owner, LLC, 31 N.Y.3d 1002 (2018), the Court of Appeals affirmed dismissal of the contract claim because the construction agreement did not contain the alleged contractual obligation to comply with § 5. A New York choice-of-law clause did not insert every statutory obligation into the contract. The Court expressly declined to decide the statutory interpretation or whether the guaranty was sufficient, and stated that the Appellate Division did not need to reach those issues.
Review the actual protection before work starts
Do not treat Skanska as a blanket Court of Appeals endorsement of any developer guaranty. Obtain the proposed security and identify its beneficiaries, payment obligations, limits, notice requirements and enforceability. The statutory duty, the contractor’s contract rights and the right to sue on a particular undertaking require separate analysis.
A public project lien attaches to applicable public funds rather than the public land. Where there is no such fund, investigate the statutory undertaking, negotiated payment security and contract remedies instead of assuming an ordinary private-property lien is available.
Kushnick Pallaci PLLC assists clients throughout New York with public construction contracts and procurement. Contact 631-752-7100 or vtp@kushnicklaw.com.
Attorney Advertising. General information, not legal advice.
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