In Pelc v. Berg, the Appellate Division, Fourth Deparment, determined that a contractor who had filed a willfully exaggerted mechanics lien was liable for the costs incurred by the home owners in discharging the willfully exaggerated mechanic’s lien but not for slander of title. The Appellate Division found that the trial court applied the proper standard – whether there was a deliberate and intentional exaggeration of the lien amount rather than a genuine mistake or a disagreement concerning the terms of the contract – and properly awarded damages to the home owners based upon the exaggerated lien. However, in regards to the issue of whether the contractor’s willfully exaggerated mechanic’s lien constituted a slander of title, the appellate division held that the trial court erroneously granted judgment to the home owners. In order to establish a claim for slander of title, the home owners were required to show that the contractor “made a communication falsely casting doubt on the validity of title, reasonably calculated to cause harm, and resulting in special damages.” The appellate division found that the mechanic’s lien consituted only notification of the subcontractor’s claim against the homeowner’s but did not consituted a false communication.
The lesson for every contractor to take from this case is to be very careful with mechanic’s liens. Too often contractors are quick to throw a mechanic’s lien against property without properly considering the ramifications of doing so and the statements set forth in the lien. A false mechanic’s lien can spell disaster or a contractor so it would be wise for those contractors that are not certain about what they should put in a lien to consult with a local construction attorney to make sure they are not opening themselves up to liability rather than protecting their interests.