mechanic’s liens – Duane Morris Construction Law

December 4, 2025 by Jose A. Aquino

Court Reaffirms: Licensing Is Essential for Home Improvement Contractors

The New York Appellate Division, Second Department, in Nationwide HVAC Supply Corp. v. Mosby, held that an unlicensed home improvement contractor cannot recover damages for breach of contract or foreclose a mechanic’s lien, and therefore dismissed the complaint. The dispute began when Andrew Mosby hired Nationwide HVAC Supply Corp. to install an HVAC system at his home, leading to a mechanic’s lien after payment disagreements. Although the trial court denied Mosby’s motion to dismiss, the appellate court reversed, stressing that Nassau County Administrative Code requires strict compliance with licensing laws. Because Nationwide failed to allege possession of a valid license, it forfeited its right to enforce the lien or seek damages. The appellate court also rejected the argument that reliance on a licensed subcontractor could cure the defect, reaffirming that subcontractor licensing does not substitute for the general contractor’s own compliance. This ruling makes clear that in New York, contractors who lack the required license cannot enforce contracts or liens, even when the work has been fully performed.

August 5, 2025 by Jose A. Aquino

Navigating Payment Protections in New York’s Public Improvements Without Public Funds

In New York, construction professionals face a distinct legal challenge when public improvements are carried out by private entities without public financing. Under the New York Lien Law, a “public improvement” refers to work performed on real property owned by the state or a public corporation. Mechanic’s liens apply only to private real property, while public improvement liens can be filed only against public funds. In the absence of either, contractors and suppliers lack a lien-based remedy to secure payment for their labor or materials.

To address this gap, the legislature amended Section 5 of the Lien Law in 2004 to require a payment bond for public improvement projects exceeding $250,000 when no public fund has been established. This bond guarantees prompt payment to contractors, subcontractors, and suppliers and serves as the exclusive financial safeguard in such cases. The statute as amended provides in pertinent part:

“Where no public fund has been established for the financing of a public improvement with estimated cost in excess of two hundred fifty thousand dollars, the chief financial officer of the public owner shall require the private entity for whom the public improvement is being made to post, or cause to be posted, a bond or other form of undertaking guaranteeing prompt payment of moneys due to the contractor, his or her subcontractors and to all persons furnishing labor or materials to the contractor or his or her subcontractors in the prosecution of the work on the public improvement.”

Unlike traditional payment bonds—which are typically posted by contractors or subcontractors as part of their contractual obligations—the Section 5 bond must be posted by the private developer. This statutory requirement shifts the financial responsibility upstream, placing the burden on the entity commissioning the work rather than those performing it. This framework ensures workers and suppliers receive payment even when lien rights are unavailable.

While this Section 5 bond protects against nonpayment in the absence of public funds, developers also typically require contractors to furnish other types of bonds within the construction agreement. These include payment bonds, which ensure compensation for subcontractors, suppliers, and laborers, and performance bonds, which guarantee that the contractor completes the work as specified under the contract. Though separate from the Section 5 bond, these additional bonds serve complementary roles—one aimed at securing financial compensation, the other enforcing contractual execution.

A key distinction exists between mechanic’s liens and payment bond claims. Mechanic’s liens typically permit recovery only for unpaid amounts owed to the defaulting party. If a contractor or subcontractor has already been paid, downstream parties—such as unpaid subcontractors or sub-subcontractors—may be left without lien rights. In contrast, payment bond claims offer broader protection. An unpaid party may still recover under the bond even when no outstanding obligation remains to the defaulting contractor or subcontractor, provided the claim is timely and complies with the bond’s terms.

Together, these provisions form an integrated framework of financial and legal safeguards. For those engaged in public improvement projects without direct public financing, understanding these requirements is essential to managing risk and securing payment.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel at Duane Morris LLP’s New York office, where he is a member of Construction Group, specializing in construction law, lien law, and government procurement law. He is also a member of the Cuba Business Group.

This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed herein are those of the author and do not necessarily reflect the views of Duane Morris LLP or its individual attorneys.

December 14, 2024 by Jose A. Aquino

Appellate Court Ruling Clarifies Legal Boundaries of Surety Roles in Mechanic’s Liens

The Supreme Court, Appellate Division, First Department, New York, recently issued a decision in Thorobird Grand LLC et al. v. M. Melnick & Co., Inc., et al., affirming the lower court’s ruling that granted the plaintiffs’ motion for summary judgment on their cause of action alleging willful exaggeration of mechanic’s liens by the defendant Surety.^{^[1]} The court invalidated and discharged the Surety’s liens but denied the plaintiffs’ claim for damages under Lien Law § 39-a.

The court determined that the plaintiffs had demonstrated the Surety did not meet the statutory definition of a contractor under Lien Law § 2, thereby invalidating its liens. The plaintiffs had engaged M. Melnick & Co., Inc. as their general contractor for certain projects. In accordance with their agreement, Melnick, along with the Surety acting as Melnick’s guarantor, executed payment and performance bonds. Upon Melnick’s termination, which triggered the Surety’s obligations under the performance bond, the Surety elected to retain Melnick to complete the project.

Subsequently, the plaintiffs initiated an action asserting breach of contract claims against both Melnick and the Surety. In response, the Surety filed three mechanic’s liens for unpaid work, while Melnick filed its own liens. The Surety also counterclaimed against the plaintiffs and additional counterclaim defendants, asserting causes of action for breach of contract, quantum meruit, unjust enrichment, declaratory relief, and lien foreclosures. The plaintiffs then filed an amended complaint that included, among other claims, a cause of action for willful exaggeration of liens.

The plaintiffs moved for partial summary judgment on the willful exaggeration claim, contending that the Surety’s liens were invalid as a matter of law because sureties lack the right to file mechanic’s liens. In opposition, the Surety argued that it qualified as a contractor with standing to file liens and had not waived its lien rights by contract.

The court concluded that the takeover agreement between the parties was clear and unambiguous, establishing that the Surety remained in its capacity as a surety and did not assume the role of a contractor. As a result, the court found the Surety lacked standing to file mechanic’s liens. However, it declined to award damages to the plaintiffs under Lien Law § 39-a, noting that such damages are unavailable when a lien is discharged for reasons other than willful exaggeration.

This decision underscores the importance of precise contractual language and the legal distinction between a surety and a contractor in disputes involving mechanic’s liens.

Jose A. Aquino (@JoseAquinoEsq on X) is a special counsel in the New York office of Duane Morris LLP, where he is a member of the Construction Group and of the Cuba Business Group. Mr. Aquino focuses his practice on construction law, lien law and government procurement law. This blog is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this blog are those of the author and do not necessarily reflect the views of the author’s law firm or its individual attorneys.

[1] 2024 WL 5080524 (1st Dep’t December 12, 2024)

January 9, 2013July 29, 2014 by Jose A. Aquino

Pennsylvania Court Distinguishes Between Corrective Work and Additional Work In Dismissing Mechanics’ Lien Claim

The Superior Court of Pennsylvania recently affirmed the dismissal of a contractor’s mechanics’ lien on the grounds that the lien was not filed within 6 months after the completion of the work as required by Pennsylvania’s Lien Law. In Neelu Enterprises, Inc. v. Agarwal, 2012 PA Super. 276, No. 787 MDA 2012 (December 18, 2012), Agarwal, as owner, hired Neelu Enterprises, Inc., a contractor, to build a house. The contractor completed a substantial portion of the work for which it was paid. However, the owner decided to terminate the contractor before the house was completed. The owner and contractor entered into a termination agreement on December 8, 2010. Thereafter, the contractor returned to the job site to correct deficiencies on several occasions through January 7, 2011. The contractor filed its mechanic’s lien on June 23, 2011, within 6 months of January 7, 2011, but more than 6 months from the date of the termination agreement. Pennsylvania’s Lien Law provides that a claimant must file a lien “within six (6) months after completion of his work.” 49 P.S. § 1502(a)(1).

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