Over the past few days, the New York Post, New York Daily News, and People reported on a mechanics lien filed against Martin Scorsese. These articles discuss the idea that Scorsese may lose his home to foreclosure, but it’s unlikely that Scorsese will find himself kicked out onto the Mean Streets of New York, New York. Sure, foreclosure is a potential outcome of a mechanics lien filing. However, mechanics liens rarely get that far.
Essentially, Martin Scorsese probably thought he’d hired some Goodfellas to remodel his house. However, it sounds like the contractor Departed without paying their supplier…
Like many home improvement projects, Martin Scorsese hired a contractor to perform work. That contractor then hired a supplier to provide materials for the project. Business as usual in construction. Payments were to be made from party to party in chainlike fashion – once the contractor received payment, he was supposed to pay the supplier…but he didn’t. As a result, the supplier filed a mechanics lien.
For a more in-depth look, take a look at this post: Construction Payment and Financial Risk: A Primer.
What’s a mechanics lien?
For parties at the bottom of the payment chain, receiving payment can feel like a Casino game – the odds are never as good as you’d like, and the risk of leaving empty handed is very real. Unlike, say, an unpaid Taxi Driver, when a member of the construction industry goes unpaid, a mechanics lien helps to level the playing field.
When a supplier
goes unpaid and files a mechanics lien, an interest is created in the property – or in other words, a “cloud” is created on the owner’s title. This makes the property very hard to transfer or borrow against, and if the lien goes unpaid, the party who filed the lien can eventually force a foreclosure on the property. The general contractor (or other party failing to make payment) isn’t off the hook though – the owner will likely have their own claims against the contractor. What’s more, many states require that the contractor defends and indemnifies the owner when a lien is filed.
That’s sounds scary, but it’s not like there are Gangs of New York
contractors filing liens whenever they feel like it. Mechanics liens have very strict requirements and deadlines keeping potential claimants in check, and at the end of the day: Nobody likes liens.
They’re a pain in the neck for everyone involved, and they’re only used a last resort. Or a “Last Waltz”
, if you will. Plus, parties who improperly utilize these laws to file fraudulent liens
face very stiff penalties.
Will Martin Scorsese Actually Lose His House?
Fat chance. This property is worth well over $10M and the lien is worth a mere $18,000. If worse comes to worst, Scorsese could put this Raging Bull
to rest by simply settling with the supplier and then going after the contractor for payment. Still, this is a fair indication of how broken construction payment systems
have become – if suppliers are going unpaid on high profile jobs like this one
, you know that suppliers on everyday jobs struggle that much more.
Martin Scorsese's Contractor "Departed" Job Without Paying Supplier
Martin Scorsese hired a contractor for a home improvement job, and that contractor failed to make payments to their supplier. As a result, a mechanics lien was filed on the property.
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