M. Demand Notices Upon Lienor—Private Improvements

• Jurisdiction: New York

M. Demand Notices Upon Lienor—Private Improvements

Assuming the lien, as filed, is valid, there are other actions an owner or contractor can take that could result in the lien being vacated. Even if the lien has been discharged, in the sense that security (a bond) has been substituted for the real property, a Lien Law § 38 demand may be made upon the lienor to detail the items of labor and/or material, and the value thereof, that make up the amount of the lien claimed.³¹⁴ Also required to be set forth in response to the demand are the terms of the contract under which the items were furnished. Failure to furnish the statement, or properly itemizing the charges forming the basis for the lien, can result in the court ordering the lien canceled.³¹⁵ Lien Law § 38 does not require any demonstration of need on the part of the property owner as a condition precedent to the lienor's statutory obligation to deliver the required statement.³¹⁶

An owner or contractor can request that the statement produced by the lienor be sufficiently clear as to what type of work is actually involved in the lien or how many hours were expended, but it cannot require the § 38 demand to be revised if the work involved is other contract work and not the work which is the subject of the mechanic's lien.³¹⁷ In B&B, the petitioner was a general contractor. One of its subcontractors, a plumbing subcontractor, filed a notice of mechanic's lien for $1.3 million, involving 13 unsold condominium units owned by the developer. The developer served a demand for an itemized statement, pursuant to Lien Law § 38. It turns out that the subcontractor worked on only one of the units and claimed the other 12 were impacted by the work it performed on that unit. It claimed all units were directly improved by the installation of shut-off valves and check valves in unit PH12H for which only $4,290 was charged. According to Judge Stallman, in pertinent part:

Because petitioner's objections to the itemized statement are not in the nature of the sufficiency of the description of the items of labor and/or material furnished, or their value, the Court does not find that respondent delivered an insufficient itemized statement to petitioner. The issue of whether or not respondent performed the work in the change orders for which respondent claimed payment is not an issue which goes to the sufficiency of the detail of the itemized statement. Therefore, the branch of the petition seeking to compel respondent to provide an "adequate" itemized statement is denied.³¹⁸

There is a fairly short time period (five days) to respond to the demand. (This illustrates why it is important to know from your client exactly what it is your client is claiming.) A sample demand to be served pursuant to Lien Law § 38 is set forth in the Forms section at the end of this book, as are forms to dismiss the lien if the lienor fails to serve the required statement.

However, Section 38 does not create a "blank check" or automatically require the lienor to provide documentation. Decisional law interpreting the statute has curtailed the breadth of its application...