Overstated Lien is Void; Contractor Thus Liable to Owner for Damages

The New York lien law, similar to lien laws in some other states, calls for rejection of a lien if it has been “willfully exaggerated.” A New York Appellate Division court has upheld rejection of a contractor’s lien for that reason.

Contractor and homeowners signed a contract for renovation work. Homeowners terminated the contract when the project was only partially complete, and arranged for completion by another contractor. In the follow-on lawsuit, the trial judge determined that the contractor had been overpaid based on evidence that the homeowners had paid the contractor $45,865.48, but the value of work performed was only $36,350.

The contractor had also asserted a lien for $33,870. At trial, the contractor’s principal testified that he had records to support the claims for additional money, but he didn’t introduce any of the purported records. The trial judge did not find this testimony to be credible, and as noted above had decided the contractor was already overpaid.

Thus, the contractor had “willfully exaggerated” its lien claim. Under § 39 of the NY lien law, the contractor’s lien claim was void, and under § 39-a, the homeowners were entitled to recover damages from the contractor arising from the invalid lien claim.

The case is Lapenna Contr., Ltd. v Mullen, 2020 N.Y. App. Div. LEXIS 6393 (App. Div., 3rd Dept., Oct. 29, 2020) (subscription required).

About Stan Martin

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Stan Martin holds a law degree and an undergraduate degree in architecture. He has been involved with the construction industry for more than 45 years, working in construction prior to law school and beginning his construction law practice. Over the course of his career, he has served on boards and committees for organizations including the Associated General Contractors of Massachusetts, the Boston Society of Architects, and the Massachusetts Building Congress.

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