The Difficulties in Reducing The Value of a Mechanic’s Lien

Owner have limited rights to summarily remove a mechanic’s lien of record. Typically, Owners achieve this result by posting a surety bond with the County Clerk where the lien was filed. Owners can also summarily remove a mechanic’s lien if it contains a facial defect such as listing the wrong owner, or if the affidavit of service of the lien is not properly filed. Other than in these limited circumstances, an owner can only remove a lien in the context of a lien foreclosure action.

Owners often complain that a contractor has filed a mechanic’s lien that, in the view of the Owner, is clearly excessive. The question then arises as to how the amount of the lien can be summarily reduced, without the necessity of engaging in motion practice and possibly a trial.

The First Department addressed this question in Pizzarotti, LLC v. FPG Maiden Lane LLC __ A.D.3d ___ 129 N.Y.S.3d 771(1st Dep’t 2020). The rules cited by the First Department apply equally to attempts by owners or contractors who seek to reduce lien claims. The bottom line is that there is a basically no device to summarily reduce the amount of a mechanic’s lien outside the confines of a mechanic’s lien foreclosure action.

In Pizzarotti, the owner had successfully had a lien reduced from $33,837,618.34 to $3,566,357.42 in summary fashion by bringing to the court’s attention lien waivers that were provided to the owner during the course of the underlying project.

The First Department reversed, holding that the court had no inherent power to discharge or modify a mechanic’s lien where there is no facial defect. Further, the court found that there was an issue of fact as to whether the lien waivers acted as releases in light of the parties’ course of conduct at the project. Accordingly, the dispute regarding the validating of the lien, including its amount, must be determined at trial.

In a proper case, a mechanic’s lien could presumably be reduced before trial if there is strong documentary evidence established as a matter of law that the amounts claimed in the mechanic’s lien are invalid. However, the First Department makes clear that this challenge must occur in a lien foreclosure action and not in an expedited special proceeding. So while an owner or contractor could effectuate a reduction (based on appropriate evidence) without going through the time and expense of a trial, they cannot avoid the time and expense of participating in a lien foreclosure action.

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