New York Lien Law § 59 provides a mechanism for a party subject to a mechanic's lien to move to vacate the lien based on the lienor's failure to prosecute. Ordinarily, a lienor has up to one year to foreclose on a mechanic’s lien before it expires, which may be extended for one additional year by the filing of a lien extension and further extended through a special proceeding under Lien Law § 19. However, if the lienor is served with a demand under Lien Law § 59, it must then foreclose upon its lien within 30 days or the lien will be vacated. This can be useful where the lien claim is too small or questionable for the lienor to justify the cost of a lien foreclosure action, allowing the impacted parties to swiftly remove the lien from the subject property. This article addresses the intricacies of this law, including its procedures, requirements, and the limited judicial discretion involved in its application.
I. Service of the Lien Law § 59 Demand
A key requirement of Lien Law § 59 is the demand must be personally served upon the lienor. Such notice shall require the lienor to commence an action to enforce the lien, within a time specified in the notice, not less than thirty days from the time of service, or show cause why the lien filed or the bond given should not be vacated and cancelled. Lien Law § 59.
Service of the notice required by section 59 must be made by either personally serving the notice upon the lienor or by leaving the notice at the known place of residence with a person of suitable age, with directions to deliver the notice to the lienor. Lien Law § 59. The personal service requirements do not incorporate the body of case law applicable to service of a summons and complaint under CPLR 308. There is a limited body of case law interpreting the service requirements under Lien Law 59, and parties often litigate over the sufficiency of service, particularly where the notice is served on someone other than a principal of the lienor or is left at the lienor’s place of business. Where the sufficiency of service is in question, the Court may order a traverse hearing to allow the process server to testify on the circumstances surrounding service of the notice.
II. Commencement of a Lien Law § 59 Special Proceeding to Vacate a Lien
If the lienor neglects to foreclose upon the mechanic’s lien after receiving the Lien Law 59 demand, the property owner or general contractor may initiate a special proceeding to vacate the lien. In cases where the lienor remains unresponsive to the special proceeding or fails to justify its failure to foreclose on its lien claim, the mechanic’s lien will be vacated.
If the lienor responds to the special proceeding, the decision whether to cancel the lien rests within the sound discretion of the Court. Matter of Selwyn Realty Corp., 184 A.D. 355 (1st Dept. 1918), aff’d, 224 N.Y. 559 (1918). However, the burden is on the lienor to provide the Court with sufficient cause as to why the lien should not be vacated. Kushaqua Estates Inc. v Bonded Concrete Inc., 215 A.D.2d 993, 994 (3d Dept. 1995).
The application to vacate the lien will be denied if the lienor can prove that an action to foreclose the mechanic’s lien was commenced within the specified timeframe in the notice. However, the commencement of a plenary action by the lienor for breach of the underlying contract will not serve to defeat the application to vacate the mechanic’s lien. Miller v. T.A. & J.M. Gen. Contractors, Inc., 476 N.Y.S.2d 449 (Sup. Ct. Kings County 1984). If the lienor is properly served with the Lien Law § 59 and fails to commence a lien foreclosure action within the required time, its lien will generally be vacated.
Conclusion
In summary, Lien Law § 59 provides a vital legal pathway for those impacted by mechanic's liens. Where a lien is willfully exaggerated, a Lien Law § 59 demand can be coupled with a demand for an itemized statement of lien under Lien Law § 38, effectively daring the lienor to foreclose upon its lien and expose itself to a counterclaim under Lien Law 39-A or abandon its lien or reduce its claim to a more defensible amount. Discharging a lien through a mechanic’s lien discharge bond pursuant to Lien Law 19(4), or simply waiting for it to expire, may also be useful alternatives depending on the circumstances. If you have been served with a Lien Law § 59 demand or wish to evaluate alternatives for challenging a lien claim, contact Sophie Wang or any of the attorneys at Muchmore & Associates PLLC for an initial consultation.
About Author
Sophie Wang graduated from the University of California, Berkeley School of Law in 2013, where she served as an editor of the Berkeley Business Law Journal. Sophie graduated summa cum laude with a Bachelor of Laws from East China School of Political Science and Law. Read more.
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