Primer on Mechanic’s Liens and Wilful Exaggeration under Lien Law § 39-a
Laborers and material suppliers (collectively, “Providers”) that add value to construction projects are entitled to be paid for their work by the owner, general contractor or whoever else hired them for the project in the first instance. If Providers do not receive payment despite their own performance, several remedies are available. For example, a simple claim for breach of contract may be brought by an unpaid Provider. Such remedies, however, may be insufficient to ensure payment. Accordingly, Article 2 of New York’s Lien Law provides additional rights and remedies to Providers by permitting the filing of mechanics’ liens against the improved property. A mechanic’s lien can be filed at any time during the prosecution of the work or within eight months after the work is completed unless the improvement relates to a single-family dwelling, in which case the time is reduced to four months. Lien Law 10.
Thus, “Lien Law § 3 provides that a contractor who performs labor or furnishes materials for the improvement of real property with the consent, or at the request of, the owner ‘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.’” NGU, Inc. v. City of New York, 189 A.D.3d 850 (2d Dept. 2020) (hyperlink added); see also Quality Aggregates, Inc. v. Prime Mix Corp., 244 A.D.3d 887, 888 (2d Dept. 2025). “It is well established that the purpose of the mechanics’ lien statute is to provide an added degree of protection to persons who provide labor or material for construction projects by providing independently enforceable security interest upon the construction property.” Strober Brothers, Inc. v. Kitano Arms Corp., 224 A.D.2d 351, 352 (1st Dept. 1996) (citations omitted); see also Sky Materials Corp. v. Frog Hollow Industries, Inc., 125 A.D.3d 751, 352 (2d Dept. 2015).
So important are the rights afforded by the Lien Law, Section 34 of the Lien Law provides that “[n]otwithstanding the provisions of any other law, any contract, agreement or understanding whereby the right to file or enforce any lien created under article two is waived, shall be void as against public policy and wholly unenforceable….” In describing the background of the adoption of Section 34, the Court of Appeals stated:
Senator James H. Donovan, a sponsor of the bill which the Legislature ultimately enacted as Lien Law § 34, described the impetus behind this legislation:
“Since the year 1897 the Legislature has recognized the need to afford protection to those who furnish work, labor and services or provide materials for the improvement of real property. Throughout the succeeding years changes in the law have been enacted to clarify, enlarge and perfect the right of those who improve real property to be paid. The Lien Law has been the sole vehicle through which such interests may gain a measure of protection. … The surrender of such protective rights as a prerequisite to obtaining a contract or subcontract is repugnant, against public policy and should be void”
It is evident from the foregoing that New York’s Lien Law is remedial in nature and intended to protect those who have directly expended labor and materials to improve real property at the direction of the owner or a general contractor.
West-Fair Elec. Contractors v. Aetna Cas. & Sur. Co., 87 N.Y.2d 148, 156 (1995) (quoting Mem of Senator Donovan, L.1975, ch. 74, 1975 N.Y.Legis Ann., at 341) (ellipses omitted).
While the Lien Law is a valuable tool for Providers to secure payment, the rights afforded by the lien law can also be abused in order to, among other things, pressure an owner or general contractor into paying a downstream Provider when, perhaps, there is a legitimate dispute as to a Provider’s entitlement to be paid. The filing of a mechanics’ lien, for example, may be a default under a mortgage, a construction loan or the contract between an owner and its general contractor. Accordingly, the Lien Law affords an owner or general contractor the opportunity to discharge a lien under certain circumstances. For example, Lien Law § 19 provides that liens for private improvements can be discharged by, inter alia, failing to commence an action to foreclose the lien within one year of filing (§19(2)), neglecting to prosecute an action to foreclose a lien (§19(3)), or by executing a bond or undertaking under specified conditions “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” (§ 19(4))[1]. Lien Law §§ 20 (discharge of lien after notice of lien filed by payment of money into court), 21 (discharge of lien for public improvement) and 21-a (vacating a lien for a public improvement, by court order) also permit the vacatur or discharge of mechanics’ liens under appropriate circumstances.
Another check on the ability to abuse the right to file a mechanics’ lien is that a lienor is not permitted to file a lien for a willfully exaggerated amount. Thus, Lien Law § 39 provides:
In any action or proceeding to enforce a mechanic's lien upon a private or public improvement or in which the validity of the lien is an issue, if the court shall find that a lienor has wilfully exaggerated the amount for which he claims a lien as stated in his notice of lien, his lien shall be declared to be void and no recovery shall be had thereon. No such lienor shall have a right to file any other or further lien for the same claim. A second or subsequent lien filed in contravention of this section may be vacated upon application to the court on two days' notice.
Section 39-a of the Lien Law, which sets forth the penalty for a willfully exaggerated lien provides:
Where in any action or proceeding to enforce a mechanic's lien upon a private or public improvement the court shall have declared said lien to be void on account of wilful exaggeration the person filing such notice of lien shall be liable in damages to the owner or contractor. The damages which said owner or contractor shall be entitled to recover, shall include the amount of any premium for a bond given to obtain the discharge of the lien or the interest on any money deposited for the purpose of discharging the lien, reasonable attorney's fees for services in securing the discharge of the lien, and an amount equal to the difference by which the amount claimed to be due or to become due as stated in the notice of lien exceeded the amount actually due or to become due thereon.
See also Degraw Construction Group. Inc. v. McGowan Builders, Inc., 178 A.D.3d 770, 771 (2d Dept. 2019). Further, to receive the benefit of Lien Law 39-a’s remedies, there must be a finding that “the lienor deliberately and intentionally exaggerated the lien amount….” Degraw, 178 A.D.3d at 771 (citation and internal quotation marks omitted; emphasis in original). That a lien “may contain improper charges or mistakes does not, in and of itself, establish that a plaintiff wilfully exaggerated a lien” and the “burden is upon the opponent of the lien to show that the amounts set forth were intentionally and deliberately exaggerated.” Consumer Protection Restoration , LLC v. Hickory House Tenants Corp., 236 A.D.3d 744, 746-47 (2d Dept. 2025) (citations, internal quotation marks and brackets omitted).
Sections 39 and 39-a of the lien law “must be read in tandem, and damages may not be awarded under § 39-a unless the lien has been discharged for willful exaggeration.” Guzman v. Estate of Fluker, 226 A.D.2d 676, 678 (2d Dept. 1996) (citations omitted); see also Thorobird Grand LLC v. M. Melnick & Co., Inc., 233 A.D.3d 520, 522 (1st Dept. 2024).[2] Lien Law § 39-a’s remedies and damages are “available only where the lien was valid in all other respects and was declared void by reason of willful exaggeration after a trial of the foreclosure action.” Matrix Staten Island Dev., LLC v. BKS-NY, LLC, 204 A.D.3d 1004, 1006 (2d Dept. 2022) (citation and internal quotation marks omitted). In circumstances where a lien is discharged “for reasons unrelated to its supposed exaggeration, there remains no lien to be declared void by the court.” Wellbilt Equip. Corp. v. Fireman, 719 N.Y.S.2d 213, 216 (1st Dept. 2000) (citations omitted). Further, because Lien Law § 39-a is penal in nature, “it must be strictly construed in favor of the person upon whom the penalty is sought to be imposed.” Guzman, 226 A.D.2d at 678; see also Esperanza Mansion Group LLC v. Mehlenbacher, 240 A.D.3d 1356, 1357 (4th Dept. 2025).
Against this backdrop, we discuss Lori Joseph Builders, Inc. v. Torres, a case decided by the Second Department on September 16, 2026. In 2020, the plaintiff entered into a contract with the defendants to act as a construction manager with respect to the construction of the defendants’ residence.[3] The Plaintiff filed a mechanic’s lien against the defendants’ property claiming it was owed money under the operative contract. Thereafter, the plaintiff commenced an action to foreclose the lien and for damages under a variety of other theories. The defendants interposed a wilful exaggeration counterclaim in their answer. After trial, the court dismissed the counterclaim and the defendant appealed.
On appeal, the Court found that damages for wilful exaggeration were not available to the defendant because the trial court found that the lien was properly dismissed as untimely. Thus, the Court stated:
When a court determines that a mechanic's lien is void due to willful exaggeration, the person filing such notice of lien is liable in damages to the owner or contractor. However, the Legislature intended the remedy in Lien Law § 39-a to be available only where the lien was valid in all other respects and was declared void by reason of willful exaggeration after a trial of the foreclosure action.
Here, the Supreme Court determined, as the defendant had argued, that the mechanic's lien was invalid because it was untimely. Therefore, under these circumstances, damages under Lien Law § 39-a for willful exaggeration of the mechanic's lien are unavailable to the defendant. [Citations, internal quotation marks and brackets omitted.]
Nonetheless, the Court found that “under the circumstances here, where the plaintiff's allegations that it had received no payment were flatly contradicted by the plaintiff's own evidence, an award of sanctions for frivolous conduct may be appropriate.”
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] When a lien is discharged by the posting of a bond or by paying money into court, a lien on the bond/funds is substituted for the lien on the real property. See, e.g., KSK Construction Group, LLC v. 26 East 64th Street, LLC, 126 A.D.3d 568, 569 (1st Dept. 2015). While the real property securing the lien is no longer encumbered, the Provider remains protected in the event it is successful on its lien claim.
[2] This BLOG has previously written about Thorobird in “The First Department Holds that Completing Surety Under Performance Bond is not Entitled to File Mechanic’s Lien”.
[3] The facts as recited herein are abridged for editorial purposes.
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