Suppliers of labor and materials may run into a problem when a customer does not pay for the services or materials provided. It is only fair that owners of a project that benefited from these contractors and suppliers should pay for these services and materials. New York Lien Law permits contractors and supplies to file a Mechanic’s Lien against the owner of project whose real estate was improved. But, can equipment lessors use the same legal process?
Today, suppliers may rent expensive equipment to customers. While it was not always accepted that rentals of equipment were lienable items, the New York Lien Law was amended to protect the interest of rental items as well.
Older cases had held that a mechanic’s lien on an equipment rental was not permitted. Troy Public Works Company v. City of Yonkers, 207 N.Y. 81 (1912); John H Black Co. v. Surdam Holding Corp., 140 Misc. 113 (Sup. Court, Erie Co. 1931).
However, the lien law was amended in 1937 to add to the existing law the provision that the rental value of equipment, machinery and tools to a contractor is a lienable item. P.J. Carlin Construction Co. v. A to Z Equipment Corp., 31 A.D.2d 546 (2d Dept. 1968).
In a 1993 case in Federal Court, called Harsco Corp. v. The New York City Department of Gen. Services, 1993 WL 138829 (S.D.N.Y. 1993), the Court stated:
“There is no question that the rental value of the scaffolding is a lienable item. Lien Law § 5 provides that one “furnishing materials” to a subcontractor on a public improvement project “shall have a lien for the principal and interest of the value or agreed price of such … materials” on the money due to the prime contractor for the project from the state. Under Lien Law § 2(12) “furnishing materials” is “deemed to mean and include the reasonable rental value for the period of actual use of machinery, tools or equipment….” See Halli International Construction Ltd. v. Albany Ladder Company, Inc., NYLJ, October 12, 1973 at 22, col. 1M (Sup.Ct. Suffolk Cnty 1973) (rental value for use of scaffolding is a proper item for a mechanics lien); P.J. Carlin Constr. Co. v. A to Z Equipment Corp., 31 A.D.2d 546, 295 N.Y.S.2d 239, 240 (2d Dept.1968) (rental value of mobile trailers used by subcontractor as offices and for storage at construction site is a lienable item).”
The current definition of “materialman” in Section 1:2 of the Lien Law is defined to include “any person who furnishes material or the use of machinery, tools, or equipment … either to an owner, contractor, or subcontractor for, or in the prosecution of an improvement. The expression “furnishes material” means and includes the reasonable rental value for the period of actual use of machinery, tools or equipment. However, the definition of materialman has been held to exclude a person who furnishes materials to a materialman. N.Y. Prac., Mechanics’ Liens in New York, 1:2 (Westlaw 2014 Ed.).
A non-public works commercial project, the equipment lessor generally has 8 months to file the lien from completion of the work or final performance under NY Lien Law Section 10. Public works projects, however, have different rules governed by NY Lien Law Section 5.
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