The owner and/or the general contractor have not paid you. So, you filed a mechanic’s lien against the property. You were hoping that filing the lien would force payment. It did not. You received service of a Notice that requires you to foreclose on your lien. Can your non-paying customer force you to foreclose on your mechanic’s lien?
It does not matter that you filed the mechanic’s lien because this very same contractor or building owner failed to pay you on the job. It does not matter that you filed the mechanic’s lien to make them pay you. This very same customer can force you to foreclose on your mechanic’s lien.
Under Lien Law Section 59 your customer may serve Notice on you requiring you to begin a foreclosure action to enforce your lien within thirty (30) days. The customer need not to prove they paid you for the work performed or for the goods supplied. They need not post a bond to secure the lien.
If a mechanic’s lien is filed and the lienor still has not paid, then the next step is to foreclose (enforce) on the mechanic’s lien. A mechanic’s lien foreclosure action is a lawsuit commenced by the unpaid lienor to force the sale of the property so that the lien can be satisfied out of the proceeds of the sale.
A lien can be extinguished if it is deemed improper in any way. The amount could be wrong, the date or other information is incorrect.
The Problems of a Customer Forcing You To Foreclose on a Mechanic’s Lien
By serving the notice properly, the customer is pressuring you to spend more money to further enforce your rights to foreclose on the lien. If you fail to do so, you lose your lien rights.
Here is the problem with foreclosing on the lien: The costs may outweigh the benefits, or you filed the lien without the intention of ever foreclosing. These costs are court and lawyer fees to name a few. In essence, the customer is calling your bluff by foreclosing.
What can you do if you do not want to foreclose on the lien? Will all chances of being paid be lost? Well, that would depend upon who brought you into the job and who the law considers responsible. As we reported earlier, you may be able to bring a civil action to be paid irrespective of the lien.
It’s important to understand your right to enforce payment and the likelihood of getting paid with or without foreclosing on the mechanic’s lien. There are ways to collect on these debts other than by foreclosing on a lien.
If you received a demand pursuant to Lien Law Section 59 or wish to enforce your right to payment with or without a mechanic’s lien, contact us and we’ll explore other ways to collect on these debts without foreclosing on a lien.