What happens if a sub-contractor is not paid?
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What happens if a sub-contractor is not paid?
I am a new business owner. The construction work on my store is finished. I fully paid my contractor/project manager. Now a person just came into my store and claimed that he is the sub-contractor who was taking care part of the construction work, however, he did not get paid by my contractor. So, now the sub-contrctor wants to put up the lien on my store. Does he has the right to do so? I paid whatever I had to pay; I did not own anybody’s money.
Asked on September 7, 2012 under Real Estate Law, New York
Answers:
Mark Siegel / Law Office of Mark A. Siegel
Answered 11 years ago | Contributor
You did not indicate whether the store is contained in real property owned by you, or whether you are a tenant (lessee) leasing the store from the landlord.
If this is a leasehold interest, then the lien is only on the lessee's interest. The property owner's interest is only affected if there has been consent by the property owner.
The NYS Court of Appeals (highest court in NYS) stated as follows:
"Subcontractors may enforce their mechanics' liens against the property specified in the notice of lien and any person liable for the debt upon which the lien is founded (Lien Law §§ 24, 41). Consequently, the Lien Law grants the subcontractor an independent right, separate and apart from a general contractor's remedies, to file and enforce a mechanics' lien against a person liable for the debt upon which the lien is founded, such as the owner, and the real estate being improved. However, the owner's liability to the subcontractor is limited to the unpaid portion of the value or agreed to price of the improvements at the time the lien is filed... Thus, in the event the general contractor fails to pay a subcontractor with the sums the owner has already paid, the Lien Law protects owners from paying more than the value of the improvements, or the contract price...The Lien Law also provides that subcontractors may file and enforce their mechanics' liens against the persons liable for the debt giving rise to the lien, in addition to rights in the real property (Lien Law §§ 24, 41)..." West-Fair Electric Contractors et al v. Aetna Casualty & Surety Company et al, 87 N.Y.2d 148 (1995)
I suggest you seriously consider consulting with an attorney who practices in this area of law in order to determine what your rights & obligations are under the particular facts of your case.
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