A mechanic’s lien is usually a contractor’s best form of payment security on a private construction project. A properly filed lien gives the contractor considerable leverage, impeding the project owner’s ability to convey or borrow against the property. Consequently, most state mechanic’s lien laws provide some protections for owners. One is the discharge of liens that willfully exaggerate the amount.
Mechanic’s liens secure payment for the value of the work performed. The best evidence of value is the contract price. In a recent New York case, the contractor submitted requisitions reflecting 78% completion of its scope of work. The contractor filed a lien that reflected a much higher percentage of completion. The contractor said there was an additional unsubmitted requisition supporting the value of this additional work.
The project owner argued that unsubmitted requisitions could not be considered. The owner demanded summary judgment discharging the lien as willfully exaggerated. A trial court and an appellate court both sided with the contractor. There is no rule of law requiring submitted requisitions in support of a mechanic’s lien amount. Other forms of evidence may be used to establish the value of the work.
The other case in this issue involved a contractor’s claim for termination for convenience costs while the contractor’s separate challenge to the propriety of the underlying default termination was still pending. The contractor was allowed to pursue the concurrent appeals, even though entitlement to convenience costs had not yet been established.