Author: LegalEase Solutions

RESEARCH FINDING

The applicable statute here is New York Lien Law § 19. That statute states that “[a] lien other than a lien for labor performed or materials furnished for a public improvement specified in this article, may be discharged” under this section. N.Y. Lien Law § 19 (McKinney). Specifically, § 19(4) states, in pertinent part:

(4) Either before or after the beginning of an action by the owner or contractor executing a bond or undertaking in an amount equal to one hundred ten percent of such lien conditioned for the payment of any judgment which may be rendered against the property for the enforcement of the lien:

1. The execution of any such bond or undertaking by any fidelity or surety company authorized by the laws of this state to transact business, shall be sufficient; and where a certificate of qualification has been issued by the superintendent of financial services under the provisions of [§ 1111] of the insurance law, and has not been revoked, no justification or notice thereof shall be necessary. Any such company may execute any such bond or undertaking as surety by the hand of its officers, or attorney, duly authorized thereto by resolution of its board of directors, a certified copy of which resolution, under the seal of said company, shall be filed with each bond or undertaking. Any such bond or undertaking shall be filed with the clerk of the county in which the notice of lien is filed, and a copy shall be served upon the adverse party. The undertaking is effective when so served and filed. If a certificate of qualification issued pursuant to subsections (b), (c) and (d) of section one thousand one hundred eleven of the insurance law is not filed with the undertaking, a party may except, to the sufficiency of a surety and by a written notice of exception served upon the adverse party within ten days after receipt, a copy of the undertaking. Exceptions deemed by the court to have been taken unnecessarily, or for vexation or delay, may, upon notice, be set aside, with costs. Where no exception to sureties is taken within ten days or where exceptions taken are set aside, the undertaking shall be allowed.

Except as otherwise provided in this subdivision, the provisions of article twenty-five of the civil practice law and rules regulating undertakings is applicable to a bond or undertaking given for the discharge of a lien on account of private improvements.

Furthermore, this statute and the aforementioned question presented was answered by the Appellate Division of the Second Department of the Supreme Court in Martirano Const. Corp. v. Briar Contracting Corp. In that case, the Court held that “surety bonds are conditioned for the payment of any judgment which may be rendered against the subject property for the enforcement of the liens (see Lien Law, § 19, subd. [4]). Martirano Const. Corp. v. Briar Contracting Corp., 104 A.D.2d 1028, 1031, 481 N.Y.S.2d 105, 108 (1984). “It therefore follows that although the property itself was released from the lien, for plaintiff to be entitled to recover, it must commence a formal action for the enforcement of the lien and obtain a judgment as if the lien still existed.” Id.

ANSWER

The filing of the bond does not change the procedural requirements required by the subcontractor for foreclosing on the lien.