It is a very common scenario: a contractor wants to file a mechanic’s lien on a project but has an arbitration clause in its contract. A misguided soul may think that the arbitration clause prohibits the filing of the mechanic’s lien. It does not. Pursuant to Lien Law Section 35, “The filing of a notice of lien shall not be a waiver of any right of arbitration of a contractor, subcontractor, material man or laborer secured to him by his contract to furnish labor or materials.” In Sommer v. Anthony J. Quarant Contracting, Inc., 40 A.D.2d 95, 337 N.Y.S.2d 957 (1st Dept. 1972), the Court held that “the language of the Lien Law is clear and explicit and unequivocally permits the filing of a notice of lien without surrendering one’s contractual right to arbitration. The intent of the statute is to permit a subcontractor to protect its lien rights and at the same time pursue arbitration.”
So contractors can go ahead and file that mechanic’s lien without fear that it will be voided by the arbitration clause. In the usual course of the action what will happen is that the arbitrator will set the amount due to the contractor and then that amount is deemed conclusive in an action by the contractor to foreclose upon its lien if the contractor is not paid the arbitration award.
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 email@example.com