Describing Condominium Properties in a Mechanic’s Lienby Joel Scott Ray on 04/25/11
Drafting a Mechanic’s Lien is simple. But what seems simple on the surface has potential problems if not done correctly. The description of the property is one of those pitfalls that can lead to disastrous results if not done properly. It is very important to go the extra mile to ensure that the description of the property is correct. If the property is not correct, then the Mechanic’s Lien will be discharged, and you lost your biggest bargaining chip against the owner or general contract.
The Statute requires that the description of the property is sufficient to identify it. So, to get the description correct is a very simple review of the deed. That can be accomplished with a title search. A curveball can occur when the property is a condominium complex. In that case it is critical to do your homework. Why? Pursuant to the Condominium Act, liens cannot be placed against individual condominium units for work to the common elements of the property without the unanimous consent of the owners. In other words, you cannot place a Mechanic’s Lien on the general property or the individual units without the units’ owners’ consent. Accordingly, the lien must be limited to those particular units that are the subject of the lien.
When the owner of a building is the subject of a lien, the lien cannot include those individual units that were sold after the filing of the Declaration of Condominium by the owner and the owner has not retained any interest in those individual units. Therefore a thorough search must be done. New York City makes it easy with ACRIS. But with the ease of ACRIS, an improper search or a search that is not thorough can lead to mistakes by failing to catch that the Declaration of Condominium was filed, when it was filed and those units still in possession by the owner.
When a lien does include the common elements or units that the owner has no interest in, the lien is called a “blanket lien.” “Blanket Lien” is a legal term that means the lien includes those portions of the condominium and individual units that are not the subject of the lien. The effect of a blanket lien makes the lien invalid at the time of filing and will be discharged by the courts when the owner brings an application to remove it. A common practice is to use the block and lot numbers in the description. It is a very effective. It is important to use the current lot numbers. In the case of condominiums, the Declaration of Condominium creates new lots numbers for the individual units. The old lot number is no longer used. The inclusion of the old lot number makes the lien a blanket lien. Here are some examples of situations that the draftsmen of the lien did not do a thorough job. Bridge View Tower, LLC v. Roco G.C. Corp., 69 A.D.3d 711, 892 N.Y.S.2d 520 (2d Dep’t, 2010)(invalidating lien as a “blanket lien” because it provided a general description of property after owner filed condominium declaration); In the Matter of Atlas Tile and Marble Works, Inc., 191 A.D.2d 247, 595 N.Y.S.2d 10 (1st Dep’t, 1993)(invalidating lien because it was filed after the declaration of condominium and included the former superseding lot number for the entire lot); In the Matter of M.M.E. Power Enterpirses, Inc., 205 A.D.2d 631, 613 N.Y.S.2d 266 (2d Dep’t, 1994)(invalidating liens because they did not exclude the condominium common areas, were not confined to the enumerated sublots, nor had unanimous consent from individual owners); Advanced Alarm Technology, Inc., 145 A.D.2d 582, 536 N.Y.S.2d 127 (2d Dep’t, 1988); and Application of Country Village Heights Condominium (Group I), 79 Misc.2d 1088, 363 N.Y.S.2d 501 (Sup. Ct., Rockland Cty., 1975), (additional reason to invalidate lien was because it failed to be limited to those units of the condominium in which the original sponsor and developer still retained an interest).
In Advance Alarm Technology, the owner of a condominium project filed the Declaration of Condominium in May, 1985. In June, 1985 and July, 1985, the owner sold at least eight units and the deeds were recorded. A subcontractor filed a mechanic’s lien in August, 1985. The person who drafted the lien for the subcontractor failed a thorough job. Initially the trial court held that that Lien was valid, but the owner appealed that decision. The Appellate Division reversed the trial court. It found that the owner did retain an interest in several units of the condominium at the time of the filing of the lien. In that regard, the lien was valid to the extent of encumbering the units still in the owners possession. However, the Appellate Division found that the description of the property was still inadequate because it failed to limit the description of the property in the Lien to the particular units still owned by the owner. The Lien included more than it was allowed, and, therefore, it was a “blanket lien” on the entire property. The Appellate Division then invalidated the entire Lien. If the Lien had described the property only as to those units the owner still owned, or rather, had not sold, it would have been valid and enforceable.
As the subcontractor found the hard way in Advance Technology, failure to properly describe the property, especially when the building is a condominium, can be fatal to a lien and a loss of one of the most important tools when trying to recover for unpaid work at a construction site.