What recourse does an owner (or other aggrieved party, such as a general contractor who is contractually obligated to remove sub-contractors’ mechanic’s liens) have for removing a mechanic’s lien from the property on which it was filed?

One commonly used option is to procure and file a surety bond with the appropriate County Clerk’s Office, in the amount of 110% of the amount of the lien.  The posting of a discharge bond removes the lien from the property and attaches the lien to the bond.  However, the bond does not actually extinguish the lien and the lienor may still bring a civil action to recover the amount at issue.

Lien Law 19(6) also permits a party wishing to challenge a lien to bring an expedited action seeking summary discharge of the lien, but summary discharge is only available where there is a “facial defect” in the lien, such as listing the wrong owner or failing to properly describe the property against which the lien is claimed.  The general rule is that where extrinsic proof must be considered to determine the validity of the lien, an expedited proceeding under Lien Law 19(6) is not the appropriate procedural mechanism to use.

Aside from these avenues (or, of course, securing release of the lien through payment to the lienor), challenges to a lien must generally be brought in the context of a lien foreclosure action.  This includes challenges to the amount of a lien, even if that amount appears clearly excessive.

The Appellate Division, First Department recently reinforced this principle in Pizzarotti, LLC v. FPG Maiden Lane LLC, 129 N.Y.S.3d 771 (1st Dep’t 2020).  There, the owner brought an expedited action under Lien Law 19(6) seeking reduction of a mechanic’s lien based on lien waivers provided to the owner during the project.  The trial court granted the owner’s motion and reduced the lien from $33,837,618.34 to $3,566,357.42.

The First Department reversed, holding that a “court has no inherent power to vacate, modify or discharge a notice of lien pursuant to Lien Law § 19(6) where there is no defect on the face of the lien.”  Instead, “any dispute concerning the lien’s validity must await a trial.”

The appellate court observed that there was a dispute as to whether the lien waivers were effective to release plaintiff’s claims, in light of the parties’ course of dealing during the project—suggesting that in a case with indisputable documentary evidence of release, a court could reduce the amount of a lien in the context of a summary proceeding under Lien Law 19(6).

The better reading of the Pizzarotti decision, however, is that a court simply has no power to discharge or modify a mechanic’s lien—including its amount—in the context of summary proceeding under Lien Law 19(6), in the absence of a facial defect in the lien.  Rather, disputes concerning the propriety of the amount of the lien must be resolved in the context of a lien foreclosure action brought by the lienor.

Practice Tip:  Parties faced with mechanic’s liens that they wish to challenge—but which do not appear to contain “facial defects” remediable in a Lien Law 19(6) summary proceeding—should consider serving a “Demand to Foreclose” under Lien Law 59 if the lienor has not yet commenced an action to foreclose the lien.  That statute allows the owner (or aggrieved contractor) to serve a written demand on the lienor demanding that the lienor either foreclose on its mechanic’s lien within 30 days of being served with the demand or show cause before a court why the lien should not be vacated.

*Update: On August 31, 2020, NYC Mayor Bill de Blasio signed Executive Order No. 60, which designated the NYC Department of Finance as the administering agency for the C-PACE financing program.  This exciting new development is a sign that the C-PACE program will likely be formally launched in NYC in the near future.

Property Assessed Clean Energy (“PACE”) (also sometimes referred to as C-PACE) financing is a little-known financing tool now available to commercial property owners in more than 35 states, including New York, New Jersey, and Washington D.C.  PACE financing is a flexible, long-term financing option provided to property owners for existing and proposed renewable energy and energy efficiency projects.  More specifically, all types of commercial real estate assets may be eligible for PACE financing including hotels, senior housing, student housing, office, retail, industrial, and certain types of multifamily properties.

PACE loans are a unique financing option that enable property owners – of both new constructions and existing buildings – to obtain funds from pre-qualified private lenders for certain energy efficient building improvements known as “qualified improvements.”  Common examples of qualified improvements include, but are not limited to, new HVAC equipment and systems, lighting, doors and windows, insulation, and solar panels.

In contrast to traditional financing options, PACE loans allow eligible property owners to obtain 100% financing for the cost of qualified improvements at competitive long-term fixed interest rates, without a personal guaranty, and such loans fully amortize over the average useful life of the installed qualified improvements, which typically ranges between 20 to 30 years.  Importantly, because PACE loans are secured by a special real estate assessment on the property, such loans are repaid as part of a building’s real estate tax payment and are fully assumable by any subsequent building owner.

While PACE financing has been an attractive financing option for eligible borrowers from its inception, mortgage lenders were initially hesitant about such loans because the special real estate tax assessment of the PACE financing is superior to any other debt (i.e. mortgage) on the property.  However, as PACE financing has gained popularity throughout the country and lenders have become increasingly familiar with this financing option, more institutional lenders have begun accepting PACE financing.

As states and cities around the nation, including New York City,[1] continue to pass legislation aimed at tackling the effects of climate change, PACE loans not only afford property owners with a unique and affordable financing tool to comply with such legislation, but also allow property owners to realize long-term savings in energy costs.

Feel free to contact us with any questions or if you would like additional information.


[1] For more information on the climate change legislation enacted in New York City, please take a look at one of our previous blogs on the Climate Mobilization Act: https://www.csrealconblog.com/2019/12/articles/construction/new-york-city-building-owners-what-does-greennewdeal4ny-mean-for-you/

The New York City Department of Buildings announced that starting Wednesday, July 8, 2020, it would resume issuing violations and penalties of $5,000.00 per violation with the potential for a Stop Work Order for sites which do not comply with the New York State Phase One Reopening procedures. Continued non-compliance will result if penalties of up to $10,000 for each offense and are more likely to receive a Stop Work Order. This change was previously announced, and comes from the existing policy, began June 8, 2020, when non-essential, non-emergency work was permitted to resume in New York City. Until July 8, 2020, the Department’s write-ups were strictly advisory.

The Department also specifically highlighted that it would issue a Stop Work order if the Safety Plan and State Affirmation of compliance with reopening requirements were not conspicuously displayed or if the site lacks a property handwash/hygiene station. Specifics of what is required can be found in the Construction Master Guidance, the “Dos and Don’ts”, and the What to Know documents.

Finally, while you must ensure the health of your own construction site personnel, Department inspectors are required to continuously self-monitor for COVID symptoms and must be permitted access to a site. Preventing their access will result in a Stop Work Order.


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

On Monday, June 8, 2020, unrestricted construction resumed in New York City. Even projects considered non-essential or otherwise exempted can restart. However, this does not mean that a project can simply forge ahead without thought or consideration. The State of New York , the New York City Department of Buildings, the Occupational Safety and Health Administration, and the Centers for Disease Control all have various requirements and guidelines for site safety in order to help prevent the spread of COVID-19 on construction sites.

Prior to reopening, all businesses operating in New York State must complete and submit the Business Affirmation form confirming that the business owner has read the updated guidelines and will comply.

What exactly is and is not permissible is not always clear. With that in mind, the NYC DOB will focus on education and counseling in the first 30 days of Phase One reopening. The DOB will still issue violations, but they will carry no penalty – however, further non-compliance may result in Stop Work orders and summonses with penalties up to $5,000.00 per violation. The DOB inspections will determine compliance with State guidance, including:

  • Compliance with social distancing protocols. Six feet of distance should be observed between all personnel, unless safety or work functions require shorter distance.
  • Anyone on site, including workers, other construction professionals, and approved visitors, who are less than six feet apart must wear face coverings. Maintaining this practice at all times is highly encouraged.
  • Readily available hygiene and hand washing stations.
  • COVID-19 safety measures signage visible to workers, reminding everyone to adhere to all safety protocols while on site, including proper hand hygiene, physical distancing rules, appropriate use of personal protective equipment, and cleaning and disinfecting protocols.
  • Tightly confined spaces (e.g., elevators, hoists) occupied by only one individual at a time, unless all occupants are wearing a face covering and the space is kept under 50% maximum capacity.
    • 50% capacity signage must be posted within the cab and at each landing.
  • A site safety monitor must be designated. The role’s responsibilities include continuous compliance with all aspects of the site safety plan.
  • Safety plan(s) are conspicuously posted on site and include a copy of the submitted State affirmation.
  • Properly completed and updated cleaning and disinfection logs.
  • A communication plan for employees, visitors, and clients is on site.
  • Correctly completed and updated logs of every person who may have had close contact with others on site to ensure effective contact tracing.

Additional resources can also be found here:

OHSA COVID-19 Control and Prevention

OSHA ALERT – COVID-19 Guidance for the Construction Workforce

CDC Interim Guidance for Businesses and Employers

NYC DOB Bulletin 2020-10

NYC DOB Phase One Frequently Asked Questions

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

 

On May 31, 2020, following Governor Andrew Cuomo’s issuance of Executive Order 202.35 on Friday, May 26, 2020, New York’s Empire State Development (“ESD”) updated its guidelines for construction projects across the state.

Construction is a Phase One industry, and while certain parts of the State have already entered Phase One of recovery/reopening, New York City and much of the southern portion of the State has not yet met the criteria to begin reopening beyond “essential” construction activities. The ESD’s updated guidelines do not change the definition of “essential,” but now permit certain on-site staging activities in anticipation of a broader construction reopening. Last week, Governor Cuomo anticipated June 8, 2020 for a full, statewide construction reopening.

Personnel are permitted on-site for the following staging and preparation activities:

  • Clean, sanitize, and/or disinfect common and work areas;
  • Test run hoists, elevators, cranes, and other equipment;
  • Establish new and multiple entrances/exists to control the movement of personnel and allow for health screening, including temperature taking;
  • Install hand hygiene/wash stations or retrofit existing ones with touchless faucets and dispensers;
  • Install health screening stations or devices at entrances;
  • Affix social distancing, hygiene, and cleaning/disinfection signage, including posters, markers, and directional arrows;
  • Deliver and stockpile personal protective equipment (e.g. face coverings, face shields, gloves); and
  • Order, unload, and rough set materials that specialty contractors or subcontractors need to perform work (e.g. structural supports, piping, conduits, drywall).

Additionally, every business, even those already operating as essential under the ESD’s guidelines, must prepare a Safety Plan in line with the template found here. While this Safety Plan does not need to be filed with any state or local agency, it must be kept on premises in case of Department of Health or local health/safety authority inspection.

 


As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice.  For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.