First Department Holds That Scaffolding and Sidewalk Shed Installed For Construction Project Could Not Support Mechanic’s Lien Because They Were Not “Permanent Improvements”
Print Article- Posted on: Nov 14 2022
This Blog, in “The New York Court of Appeals Addresses the Issue of When a Mechanic’s Lien Can Be Placed on a Landlord’s Property By A Contractor Performing Work For A Tenant,” quoting John P. Kane Co. v. Kinney, 12 Bedell 69 (1903), explained the purpose of a mechanic’s lien as follows:
The object and purpose of [New York’s] mechanics’ lien law was to protect a person who, with the consent of the of the owner of real property, enhanced its value by furnishing materials or performing labor in its improvement, by giving him an interest therein to the extent of the value of such material or labor. The filing of the notice of lien is the statutory method prescribed by which the party entitled thereto perfects his inchoate right to that interest.
Section 3 of New York’s Lien Law, which describes who is entitled to a lien, provides:
A contractor, subcontractor, laborer, materialman [among others] who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof, or of his agent, contractor or subcontractor …, shall have a lien for the principal and interest, of the value, or the agreed price, of such labor …, or materials upon the real property improved or to be improved and upon such improvement, from the time of filing a notice of such lien as prescribed in this chapter….
“Lien Law § 3 should be liberally construed to secure the purpose for which it was intended, namely the protection of that class of people who perform services or supply the material for the improvement of realty….” Claudio Perfetto, Inc., v. Waste Management of New York, LLC, 274 A.D.2d 389, 390 (2nd Dep’t 2000) (citations omitted) (finding, however, that “mere acceptance of construction debris or waste does not constitute an “improvement” as that term is defined in Lien Law § 2(4).)
Mechanic’s liens are valid only when the labor or materials supplied for the project result in permanent improvements thereto. Section 2(4) of the Lien Law provides:
The term “improvement,” when used in this chapter, includes the demolition, erection, alteration or repair of any structure upon, connected with, or beneath the surface of, any real property and any work done upon such property or materials furnished for its permanent improvement … and shall also include the reasonable rental value for the period of actual use of machinery, tools and equipment … in connection with the demolition, erection, alteration or repair of any real property….
What constitutes a “permanent improvement” to real property is an issue that is ripe for litigation.
On November 3, 2022, the Appellate Division, First Department, decided Matter of W 54-7 LLC v. Intersystem S&S Corp. The respondent in W 54-7 was a subcontractor that supplied scaffolding and a sidewalk shed for “permanent repair work to the façade” of a building that was being prosecuted by the owner’s general contractor. The subcontractor filed a mechanic’s lien when it was not paid by the contractor. Petitioner, the building owner, successfully brought a special proceeding to vacate and discharge the mechanic’s lien and the respondent, subcontractor, appealed.
The First Department affirmed the supreme court’s order discharging the mechanic’s lien finding that “the scaffold and sidewalk shed that respondent installed at the premises were temporary structures, not for the ‘permanent improvement’ of real property within the meaning of Lien Law § 2(4).” The Court noted that the contract between the subcontractor and the contractor “expressly contemplated the eventual removal of the scaffold and sidewalk shed”. Thus, the Court held that “[a]lthough arguably permanent repair work to the façade of the premises necessitated the construction of the scaffold and sidewalk shed for the safety of the public (see NY City Building Code [Administrative Code of City of NY, tit 28, ch 7] § BC 3314.1), the structures themselves affected no permanent change to the building. The project therefore falls outside the scope of labor and materials protected under the Lien Law (see Lien Law § 2[4].)” (Some citations omitted.)
Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.
This article is for informational purposes and is not intended to be and should not be taken as legal advice.
