Mechanic's Lien Filed by a Subcontractor, Materialman, and Laborer - The Consent Requirement
By Robert J. Lum
Many of our clients in the real estate development industry have asked us whether a subcontractor, materialman, and laborer can file a lien against a construction project even if there was no contract between the client and those individuals/entities. It comes as a shock to those clients when we tell them yes.
As a condition precedent to a valid mechanic’s lien, the New York Mechanic’s Lien Law requires that improvements of real property must be made “with the consent or at the request of the owner thereof, or of his agent, contractor or subcontractor … .” The courts have liberally interpreted this law and have allowed liens to be filed against a property if a subcontractor, materialman, or laborer, consented to improvements but the owner did not.
An owner's consent is required in every case, but where the owner has entered into a contract with a lienor, the “consent” requirement is obviously met. However, privity of contract between the owner and the subcontractor, materialman, or laborer, is not required. Even in the absence of privity of contract, the owner may be found to have consented to the work. A common industry example is when a materialman of the contractor provides materials for a construction project, which are required under a contract between the contractor and owner, and the materialman files a lien against the project because the contractor fails to pay for those materials. In the court’s perspective, the owner will be deemed to have consented to those materials so to justify a lien for the materialman.
However, the subcontractor, materialman or laborer must be sure that the materials provided or work is done under a contract with, or with the consent of, all persons having an ownership interest in such property. Consent may be express or implied, depending on the circumstances. The courts follow the principle that one who knowingly receives the benefit of materials, labor, or equipment of another, and such were provided for the improvements upon the owner’s real property, then that real property should be subjected to a mechanic’s lien for the value of such improvements.
Notably, there is no consent where the subcontractor, materialman, or laborer obtains consent by fraud, performs work that was not part of the job, or where the owner informs them to stop the work.
It is necessary for an owner to clearly state what is within the scope of work, and to the best of its abilities, state what is not within the scope of work. If a subcontractor performs work that is not originally intended by the owner, then the owner should immediately provide written notice to the subcontractor to stop its performance of that work.