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Reasonableness of Lien Not a “facial defect”

Reasonableness of Lien Not a “facial defect”

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Rare Lien Commentary from Court of Appeals

It is not often that the Court of Appeals chimes in on issues relating to the Lien Law in New York.  As construction practitioners, if we get a decision a year from the State’s highest Court its exciting.  So, the April 2017 commentary and decision on facial defects under Lien Law Section 19 was a welcomed surprise.

Is it Subject to Summary Discharge?

At issue was whether a mechanic’s lien was subject to summary discharge.  The high court noted that there are two methods to challenge a mechanic’s lien: 1) where there is a facial defect, a special proceeding may be brought; or 2) where the lien is facially valid it may be challenged in at a foreclosure action.  The lien at issue was challenged as facially defective.   However, the Court held that the lien was not facially defective as the lien did not seek to recover for non-lienable expenses.  The court did note that if the lien, on its face, sought to recover for non-lienable expenses then it would have been subject to a summary discharge proceeding.  The Court found that the “real” challenge at issue was the reasonableness of the fees charged.  In reaffirming long standing law on the issue of the reasonableness of the amount of a mechanic’s lien, the Court found that any dispute over the reasonableness of the amount claimed in the lien had to be resolved through a foreclosure trial.

While nothing was particularly new in this case, it does offer some very clear guidance from the Court of Appeals which will undoubtedly make it easier on practitioners at the trial court level trying to challenge (or defend) liens claimed to be facially defective.

The April 2017 case was:

Rivera v. Department of Housing Preservation and Development of City of New York

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