Perhaps the most common reason that someone chooses to challenge a mechanic’s lien is that they believe that the amount of the lien is incorrect. Sometimes the person challenging the lien does not believe that the lienor is due anything. Sometimes the person challenging the lien simply believes that the lienor is due less than is set forth in the lien. Regardless, the person challenging the lien, typically the owner, will be frustrated to find out that the amount of a lien is not something that can be challenged unless a foreclosure action has commenced. This means that in New York, a lienor could file a mechanic’s lien for millions of dollars more than is due and then simply sit back and remain unchallenged by the owner.
The owner is not totally with recourse though. If someone want to force the lienor’s hand, Lien Law Section 59 is there for the taking. Under Lien Law Section 59, the owner or general contractor may serve a demand upon the lienor which requires the lienor to either foreclosure upon its mechanic’s lien within 30 days or show cause why the lien should be not discharged. By taking this course of action the lienor has been forced into two options. First, do nothing and the lien will be discharged for failure to commence a foreclosure action. Second, commence a foreclosure action and be forced to defend the merits of the lien (including the amount due). For a lienor that really did just file an exaggerated lien there are severe consequences to proceeding with the foreclosure. The most severe consequence being that the lienor is now subject to penalties, attorneys fees and damages under Lien Law Section 39 and 39a. Of course, there are consequences to the owner that serves the demand too. By forcing the lienor’s hand you are now spending money on a legal proceeding to challenge the lien. Beyond that, if the lienor responds to the Lien Law Section 59 demand by foreclosing on the lien, you are now stuck in what will likely be costly and time consuming litigation.
Lien Law Section 59 is very particular in what must be in the demand and how and when it must be served. If you have been served with a demand to foreclose under Section 59 or if you want to serve a demand to foreclose under Section 59, it is strongly suggested that you consult with experienced lien law attorneys.