Title issues
Mechanic’s lien
A contractor’s unpaid bill can attach to the property as a mechanic’s lien. How the search finds it, the four ways it clears, and who pays under the contract.
Can you close with a mechanic’s lien on the property?
Quick Answer
Lien · Blocks the closing until it is resolved
How is it found?
- The title search returns a notice of mechanic’s lien filed with the county clerk against the block and lot
- The lien names a contractor or supplier the seller used during a recent renovation
- An extension of lien has been filed, which keeps a lien alive past the period it would otherwise have lapsed
- The DOB record shows a recent job filing or permit history that lines up with the dates in the lien
- A lien was filed against a neighboring or similarly numbered lot and indexed against the wrong parcel
How is it cured?
- Confirm the lien is against the right parcel and was filed within the statutory period, because a late or misdirected filing is defective on its face
- Obtain a payoff and a lien waiver from the claimant, pay it at closing from the seller’s proceeds, and record the satisfaction
- Where the amount is disputed, bond the lien so it comes off the property and the dispute continues against the bond
- Where the lien is defective, move to discharge it by order rather than paying a claim that would not survive review
- Where the seller and contractor are negotiating, escrow the claimed amount with a release condition tied to the satisfaction being filed
What does clearing it cost?
Paying the claim is the direct cost and it comes out of proceeds. Bonding costs a surety premium and collateral, which is why owners bond a contested claim and pay an uncontested one. Moving to discharge a defective lien is motion practice, so it is worth doing only where the defect is clear and the claim is large.
Who pays for it?
The seller. The work was ordered during the seller’s ownership and a standard New York contract obligates the seller to convey free of liens, so the payoff, the bond premium or the escrow comes from the seller’s side of the statement.
How long does a mechanic’s lien last?
A lien on a single-family dwelling and a lien on other property run for different periods, and both can be extended by filing. The practical point for a closing is that an unextended lien eventually lapses, so the first question is whether the lien in the search is still live or is a stale filing nobody removed.
Can the buyer just take the property subject to the lien?
A buyer can agree to anything, but a lender will not, and title will except the lien from coverage. Taking a property subject to a live mechanic’s lien means inheriting a claim enforceable against the property through foreclosure, so it is a price negotiation rather than a paperwork question.
What if the work was done without a permit?
Then the file has two problems that arrived together. The lien is a money claim in the county clerk’s index; the unpermitted work is a Department of Buildings matter with its own summons and its own cure. Clearing one does not clear the other, and each needs its own line in the closing checklist.
What else should you read before closing?
In the glossary
- Mechanic's lienA statutory lien securing payment for labor or materials that improved real property. The filing deadlines run from the last date work was performe...
- LienA claim against property securing payment of a debt. Liens rank by priority, and closing normally means paying or releasing every one ahead of the ...
- EncumbranceAny interest in the property held by someone other than the owner, whether monetary such as a mortgage or lien, or non-monetary such as an easement...
- Marketable titleTitle a reasonable buyer would accept, free of defects that would expose that buyer to litigation. Most New York contracts require the seller to co...
- Title exceptionA matter the title policy does not insure against, listed on Schedule B. Some exceptions are removed before closing and others are simply accepted ...
- Escrow (at closing)Funds or documents held by a neutral party until stated conditions are satisfied. At a New York closing it usually means a holdback from proceeds u...
Questions this raises
- What happens if the title search finds a problem before closing?Schedule B-I requirements are the punch list, not a dead deal. How New York closings clear old liens, missing satisfactions and name hits before th...
- What does title insurance cover?Old liens, recording errors, forged deeds, undisclosed heirs, easements: what a New York title policy covers, what Schedule B excludes, and how cla...
- What is curative title work?Curative work clears Schedule B-I before closing: payoffs, missing satisfactions, heirship affidavits, ACRIS indexing fixes and escrow holdbacks in...
Title issues
- Judgment lien against the sellerA docketed money judgment attaches to New York real property the seller owns in that county. Here is how it surfaces, how it clears, and who pays it.
- Open permitAn open DOB permit is work the City still shows as unfinished. It rarely kills a NYC deal outright, but it moves the date and it follows the buyer.
- Lis pendens (notice of pendency)A notice of pendency warns the world that litigation could affect title. What a lis pendens does to a New York closing, how it comes off, and who p...
Building types
- New-development condoA first sale from the sponsor of a newly built condominium, governed by an offering plan, often delivered on a temporary certificate of occupancy.
- Townhouse and 1-4 family condo declarationA small building divided into condominium units, where outdoor space, party walls, multiple-dwelling registration and the certificate of occupancy ...
- Sponsor resale condo unitAn unsold condominium unit the sponsor still owns years after the building opened, sold under the original offering plan rather than as an ordinary...
The statute itself
The violation code
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Legal Disclaimer: This page is general information about New York practice. It is not legal advice, it does not account for the terms of any particular contract, building or transaction, and reading it does not create an attorney-client relationship. This is attorney advertising. Prior results do not guarantee similar outcomes.