Mechanics’ Liens and Discharge Bonds

By Jonathan H. Freiberger

Mechanics’ liens are powerful tools available to, inter alia, contractors, laborers and materialmen when they are not paid for their work in improving real property. As the Court of Appeals noted long ago:

The object and purpose of the mechanics' lien law was to protect a person who, with the consent 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.

John P. Kane Co. v. Kinney, 174 N.Y. 69, 73 (1903). Section 3 of the Lien Law provides that a “contractor, subcontractor, laborer, materialman … who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof …, shall have a lien for the principal and interest, of the value, or the agreed price, of such labor ... due or payable for the benefit of any laborer, 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 purposes 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, 274 A.D.2d 389, 390 (2d Dept. 2000) (citations omitted).

Once filed, a mechanics’ lien is valid for one year “unless within that time an action is commenced to foreclose the lien, and a notice of the pendency of such action … is filed with the county clerk of the county in which the notice of lien is filed” or unless an extension is filed by the lienor. Lien Law § 17 (emphasis added); see also Thomas Bros. Pile Corp. v. Rosenblum, 134 A.D.3d 1020, 1021 (2d Dept. 2015).  A lienor only gets one extension by filing. If an action to foreclose the lien is not commenced within the extension period, the lien can only be extended by an order of the court. Aztec Window & Door Mfg., Inc. v. 71 Village Road, LLC, 60 A.D.3d 795, 796 (2d Dept. 2009). Absent an extension, “the lien automatically expires by operation of law, becoming a nullity and requiring its discharge.” Id. (citation omitted).

A mechanics’ lien is an encumbrance on real property. Edward Joy Co., Inc. v. McGuire & Bennett, Inc., 199 A.D.2d 1015 (4th Dept. 1993). Thus, the placing of a mechanics’ lien on real property can adversely impact the owner’s rights. For example, the filing of a mechanic s’ lien could be an event of default under a mortgage loan. Similarly, the existence of a mechanic s’ lien could negatively impact the ability of an owner to mortgage or sell the liened property. Thus, the ability to discharge a lien is critical to an owner.

Section 19 of the Lien Law offers several ways to discharge a lien.[1] Thus, a lien will be discharged: when the lienor files a satisfaction or release of the lien (Lien Law § 19(1)); if the lienor fails to commence an action to foreclose the lien or extend the lien within a year of filing (Lien Law § 19(2)); by court order vacating the lien for failure to prosecute the lien (Lien Law § 19(3)); by filing with the county clerk a copy of a transcript of a judgment “showing a final determination of the action in favor of the owner of the property against which the lien was claimed (Lien Law § 19(5)); by obtaining a court order summarily discharging the lien because, inter alia, the “character of the labor or materials furnished and for which the lien is claimed” do not support a lien or the lienor failed to comply with section 9[2] of the Lien Law (Lien Law § 19(6)); or, as is relevant to today’s article, by the posting of a bond discharging the lien(Lien Law § 19(4)).

Section 19(4) of the lien law provides that “[e]ither before or after the beginning of an action by the owner or contractor executing a bond or undertaking in an amount equal to one hundred ten percent of such lien conditioned for the payment of any judgment which may be rendered against the property for the enforcement of the lien….” The lien attaches to the posted bond in place and instead of the real property. The lienor remains protected and the owner is not constrained by the encumbrance of the lien.

Against this backdrop, we discuss Hewitt Builder and Renovations, Inc. v. Farmingville Assoc. Phase 1, LLC, a case decided by the Appellate Division, Second Department, on May 6, 2026.[3] The defendant property owner in Hewitt (“Owner”) entered into a construction contract with the defendant general contractor (the “GC”). The plaintiff subcontractor (the “Sub”) entered into a subcontract with the GC. The Sub alleged that it completed its work under the subcontract but only received partial payment for its work. As a result, on November 29, 2021, the Sub filed a mechanics’ lien against the property. Four months later, in March of 2022, the Sub commenced an action to foreclose its lien, but failed to file a notice of pendency. On December 21, 2022, over a year after the commencement of the action, the Owner obtained a surety bond discharging the lien. The Sub appeals from the motion court’s grant of the defendants’ motion to dismiss the complaint because the lien subject to the foreclosure action lapsed.

The Second Department affirmed and stated:

Pursuant to Lien Law § 17, a mechanic's lien expires one year after filing unless an extension is filed with the County Clerk or an action is commenced to foreclose the lien and a notice of pendency is filed within that time period. Here, since it is undisputed that the plaintiff failed to file a notice of pendency or move to extend the time to do so within one year after the mechanic's lien was filed, and no extensions of the mechanic's lien were obtained from the court, the mechanic's lien automatically expired by operation of law one year after it was filed. Contrary to the plaintiff's contention, the bond obtained by the defendants did not permit the plaintiff to continue the foreclosure action against the bond rather than the property as the bond was obtained after the lien had automatically expired by operation of law.

(Citations and internal quotation marks 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.

[1] Section 20 of the Lien Law permits the discharge of a mechanics’ lien by depositing with the “county clerk, in whose office the notice of lien is filed, a sum of money equal to the amount claimed in such notice, with interest to the time of such deposit.”

[2] Section 9 of the Lien law sets forth the required contents of a mechanics’ lien.

[3] Some of the facts recited herein were obtained from the motion court filings available on the court’s NYSCEF system.