A mechanic's lien is a legal concept unfamiliar to the average person. Those people who are actively involved in the construction industry are all too familiar with it. With private construction projects coming to a screeching halt in this economic climate, condominium owners, whether commercial or residential, should become better versed in this area of the law in order to protect their rights more effectively if mechanic's liens are filed against their property. As you probably know, a mechanic's lien is a legal process which seeks to guarantee payment for contracted services for the improvement of real property. In New York, a mechanic's lien cannot be placed against a condominium unit if the unit owner did not expressly consent to the work. However, if the board of managers acts on behalf of the unit owners, a contractor can place a lien against each individual condominium unit where work was performed. There can be a number of consequences that follow once a mechanic's lien is filed. The main and obvious consequence is that the owner of the real property no longer owns the property with clear title and cannot freely transfer its property with clear title until the lien is removed. There are some not so obvious consequences to a mechanic's lien being filed against a condominium. For instance, a commercial-condominium tenant can be held in default under its lease when a mechanic's lien is filed against its leasehold interest. An individual residential unit owner may be forced to bear the costs of removing a mechanic's lien if the board of managers entered into a construction contract on behalf of all unit owners. There are also some rare situations where the board of managers enters into a contract which expressly provides that it is acting on behalf of all unit owners, but the unit owners have no idea that this provision is in the contract. In that situation, the contractor has legitimate grounds to file liens not only against the unsold condominium units but against those individual units which were sold. Condominium unit owners should be aware of these issues so that they can properly prepare their defenses and avoid liability for payment to the contractor. Obviously, individual unit owners who contract with improvement contractors, can have mechanic's liens filed by the unpaid contractor. In cases involving condominiums, timing can be everything. New York's lien law protects purchasers of real property against mechanic's liens filed by contractors for work performed prior to the purchase of such property. Recently, a New York court found that as long as the deed transferring the property complies with the specific requirements of New York Lien Law Section 13 (5), a lien filed after the recording of the deed is defective. That provision of the New York Lien Law creates a trust fund for the purpose of paying the cost of the improvement. Timing can also be significant where the Sponsor negotiates and executes the construction contract and the Board of Managers is elected after the Sponsor sells the condominium units. One court has found that under those circumstances, unit owners will not be liable to pay for improvements to the common elements when they did not elect the Sponsor which created the liability. Although the purpose of a mechanic's lien is to guarantee payment, it is not a fast cure and can be especially burdensome to property owners. The fastest way to clear title or cure a default under a lease agreement while awaiting trial for the foreclosure of the lien, is to file a bond in the amount of 110% of the lien amount in order to discharge the mechanic's lien. But for the average individual this means putting up cash to bond the lien. Unfortunately, it requires a lot more effort, time and money to have the lien removed from the property in contrast to the amount of effort, time and money one needs to spend in order to file the mechanic's lien. If there is a triable issue of fact as to the merits of the lien claim, the lien claim may not be disposed of by trial for a number of years. Unfortunately the judicial process moves at a pace less than swift. If you are unfortunate and have a lien filed against your condo unit, it is advisable to retain a construction attorney who will be experienced in this field of law. Peter Goetz is founding partner and Rosalie Valentino is an associate for Goetz Fitzpatrick LLP, New York, N.Y.