A Notice of Pendency, also referred to as lis pendens, is a critical step in the lien foreclosure process. It is filed in the county records office to act as notice that there is pending litigation in connection with a piece of real property. But they don’t last forever. A New York Appellate Court recently highlighted some of the challenges lien claimants can face regarding Notices of Pendency in regards to a foreclosure proceeding.
NY lien enforcement and Notices of Pendency
An opinion released by a New York Appellate Court dismissed an electrical subcontractor’s mechanics lien foreclosure lawsuit. The claimant had filed a valid claim, initiated a timely lawsuit, and properly filed a “Notice of Pendency.” This case provides an important lesson to NY lien claimants who are in litigation.
Lien foreclosure action postponed due to bankruptcy proceedings
The case in question is Ampul Electric, Inc. v Village of Port Chester.
Project Snapshot
- Owner- Village of Port Chester Industrial Development Agency (Village)
- Represented by: Brian Belowich of Belowich & Walsh, LLP
- Contractor: March Associates Construction, Inc. (March)
- Subcontractor: Ampul Electric, Inc. (Ampul)
- Represented by: Alan Kachalsky of Delorio Law Firm, LLP
Ampul was hired as a subcontractor on an urban renewal project owned by Village. As the project neared completion, Ampul filed a mechanics lien to collect on the unpaid balance under the subcontract. Eventually an enforcement action was filed, along with the required Notice of Pendency in 2006.
However, the lawsuit was postponed for quite some time due to a bankruptcy stay order. Ampul then filed a claim against March in the bankruptcy proceeding. But in 2010, Ampul withdrew their claim from the Bankruptcy Court, and attempted to proceed with their foreclosure action; which included filing a motion to extend their notice of pendency. March responded by filing a motion to cancel the notice of pendency since more than 3 years had passed, which the court granted.
Subcontractor fails to renew its Notice of Pendency: Lien claim gets dismissed
The problem was that more than 3 years passed since the claimant filed a “notice of pendency.” This notice is a requirement in New York, whereby mechanics lien claimants must file a notice stating that a lawsuit is pending that affects title to the property. These notices are effective for three years, and extendable. In this case, the mechanics lien claim was correct, the foreclosure action was properly filed, and the notice of pendency was properly filed…it just wasn’t renewed.
Pursuant to CPLR 6513, a “notice of pendency is valid for three years from the date of filing and may be extended for additional three-year periods upon a showing of good cause. The extension, however, must be requested prior to the expiration of the prior notice. This is an exacting rule; a notice of pendency that has expired without extension is a nullity”
Seems like a harsh remedy, but in America, procedural rules can trump justice, fairness and more. That’s why it’s important to avoid mistakes when filing a mechanics lien.