Bills pending before the state legislature could have significant impact on the lien law

The next session of the New York State Legislature, will include many new faces in both the Assembly and Senate. Owners, contractors, suppliers and construction industry professionals should keep their eyes on three bills proposing changes to the Lien Law that have stalled since earlier this year. These bills, discussed below, if enacted into law, could have significant impact on the lien rights of contractors, subcontractors, materialmen and licensed land surveyors. Bill S. 6769/A. 9850 This bill would amend Section 10 of the Lien Law and allow for mechanic's liens for unpaid retainage to be filed within 90 days after the retainage is due to be released. This bill if enacted would be a significant extension of the lien rights of subcontractors. Subcontracts routinely contain clauses whereby a contractor is not required to release retainage until the subcontractor's work has been approved by the owner. Under the current law, subcontractors that have completed their work, but are waiting for their retainage to be released, could lose their lien rights if the waiting time exceeds the eight month limitations period for filing a lien. The amendment would cure this inequity by providing an extended time period for subcontractors to file liens for unpaid retainage. This bill was passed by the State Senate on March 21, 2010. The Assembly, however, never voted on the bill. Bill A. 3513 This bill would amend Section 3 of the Lien Law by creating a new subsection which would allow licensed land surveyors who furnish surveys, reports, plats or plans of real property to file a mechanic's lien against said property. Under the current law, a land surveyor can only file a mechanic's lien if its work product is used in the performance of a tangible improvement to the land. Other professionals (i.e. engineers and architects) currently are eligible to seek redress under the Lien Law without restrictions similar to those that apply to land surveyors. The amendment would eliminate the current unequal treatment of land surveyors. Bill A. 3869 This bill also would amend Section 3 of the Lien Law and require county clerks to note a mechanic's lien accept for filing against private property unless the contractor, subcontractor or materialman seeking to file the lien provides the county clerk with proof that it is authorized to conduct business in the county. While probably intended to apply only to home improvement contractors, if this bill were to become law in its current form, many contractors and suppliers could be unintentionally deprived of their lien rights. For example, many counties do not require commercial contractors to be licensed in order to perform work in the county. Many counties also do not require subcontractors on home improvement projects to be licensed. Furthermore, out-of-state suppliers, who rarely are authorized to conduct business in New York, would be forced to become authorized to conduct business not only by the state but by each county in which it supplies materials. With respect to all of these bills, currently written, their provisions would only apply to mechanic's liens filed against private construction projects. Whether the omission of public improvement projects from the scope of these bills was intentional remains to be seen. Andrew Richards, Esq., is a partner at Kaufman Dolowich Voluck & Gonzo LLP, Woodbury, N.Y.