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Prestige Title Agency, Inc. provides Commercial and Residential Title Services Nationwide.  For more information, please contact Anthony Chiellino at (212) 651-1200 or achiellino@prestitle.com.

Spring 2009 Issue 3

PRESTIGE TITLE AGENCY, INC.

Prestige Title eNews
Spring 2009 

Greetings!
Welcome to the third edition of Prestige Title eNews.  In this issue we visit the procedure for bonding Mechanic's Liens, which has become a popular topic in these economic times.
 
In addition, see our "Recent News Items" section for some important changes to various legal forms related to real estate transfer.
 
If you have any questions or would like further information regarding any of the items in this newsletter, please contact Michael Alfieri, Esq. at (212) 651-1200 or malfieri@prestitle.com.
 
Also, if there are any topics that you would like us to include in future newsletters, please feel free to e-mail us with suggestions at info@prestitle.com.
 
Wishing everyone a pleasant spring.
 
- Anthony Chiellino, President
Bonding of Private Mechanic's Liens Under Section 19(4) of Lien Law
Given the current economic downturn, it seems like a good time to dust-off and visit one of the ways to discharge a private mechanic's lien.  Specifically, we will look at the procedure of obtaining a discharge of a private mechanic's lien by bonding.
 
The concept of bonding a private mechanic's lien is also sometimes known as "bonding off" the lien.  Lien Law Section 19 sets forth the ways in which a mechanic's lien for private improvement can be discharged.  For the purposes of this article, we will focus specifically on the bonding of a private mechanic's lien as set forth under Section 19(4) of Lien Law.
 
The effect of bonding the mechanic's lien is that the lien is discharged to the extent that it no longer operates as a charge against the real property.  Rather, the burden shifts from the real property to the bond itself; the bond becomes a substitute for the real property.  Therefore, if the lien needs to be satisfied, it will no longer be done so out of the real property.
 
Effective January 1, 2003, Chapter 582 of the Laws of 2002 amended the procedure under Section 19 of the Lien Law in connection with obtaining the discharge of private mechanic's liens by bonding.  Prior to January 1, 2003, Section 19(4) of Lien Law stated that a mechanic's lien could be discharged by bonding once a court determined the amount of the bond, approved the bond or undertaking of the sureties, and ultimately issued an order discharging the lien by having the bond posted to ensure payment of any judgment rendered in favor of the lienor.  Effective January 1, 2003, the legislature changed this procedure. The determination was made by the legislature that the amount of the bond required to discharge the lien should be a set amount, thereby eliminating the requirement to apply to the court to set the bond amount.  Section 19(4) statutorily sets the amount of the bond at 110% of the amount of the lien and, most importantly, further provides that the bond may be filed and the lien discharged without a court order.
 
Under the statute, the execution of any bond or undertaking by any fidelity or surety company authorized by the laws of New York to transact business shall be deemed sufficient subject to the following:
  1. No further justification of the bond or undertaking is necessary where a Certificate of Qualification has been issued by the Superintendent of Insurance under Section 1111 of the New York Insurance Law and a statement provided that the certificate has not been revoked (attached to the bond).
  2. A certified copy of the resolution of the Board of Directors of the fidelity or surety company authorizing the bond or undertaking is required to be filed with the bond or undertaking.
  3. Any such bond or undertaking shall be filed with the clerk of the county in which the original notice of lien is filed and a copy shall be served upon the adverse party and filed.  The bond or undertaking is effective when so served and filed.
  4. If a Certificate of Qualifications under Insurance Law Section 1111 for the fidelity or surety company is not filed with the bond or undertaking, the lienor may except to the sufficiency of the surety by serving notice of objection on the owner or contractor which served it with a copy of the bond or the undertaking within 10 days of the date the lienor receives a copy.
  5. If the lienor does not object to the sureties within the 10 day period or if the court dismisses the exception(s) taken, the bond or undertaking is deemed effective.

To read more about bonding of mechanic's liens, see the list to the right or click here. 

If you have any questions about this article or would like further information, please contact Michael Alfieri, Esq. at (212) 651-1200 or malfieri@prestitle.com.

In This Issue
Bonding of Mechanic's Liens
Recent News Items
Announcements
Did you know that Prestige Title handles Commercial transactions nationwide?
 
Please contact Anthony Chiellino for further details at (212) 651-1200 or
achiellino@prestitle.com.
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Bonding of Mechanic's Liens (cont.)Payoffs 
Service
As to service of the bond, service is deemed effective as follows:

1.  If the lienor does not appear by an attorney or cannot be found, then service may be made by leaving a copy of the bond and notice at the lienor's place of residence with a person of suitable age and discretion;

2.  If the lienor is a corporation, then service may be made at the corporation's principal place of business within the state as set forth in the lien with a person of suitable age and discretion;

3.  If the residence or place of business is unknown, then service may be made as the court directs; and

4.  If the mailing address on the notice of lien is outside of the state, then service may be made by registered or certified mail.

Section 19(4) (d) also provides that the provisions of Article 25 of the CPLR regulating undertakings is applicable to bond or undertaking given for the discharge of a mechanic's lien on private improvements.

Surety or Fidelity Not Authorized to Transact Business in New York State
When the bond or undertaking is to be provided by a surety which is not a fidelity or a surety company authorized to transact business in New York State, the owner or contractor shall execute a bond or undertaking with two or more sureties (freeholders) to the clerk of the county where the premises are situated.  The sureties must together justify at least double the sum named in the bond or undertaking.  A copy of the bond or undertaking with notice that the sureties will justify to the court must be served upon the lienor or his or her attorney on not less than five days notice to the lienor.  Upon approval of the bond or undertaking by the court, the court issues an order discharging the mechanic's lien. 

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Recent News Items 
Described below is a summary of recent newsworthy items that you may find of interest:
 
CONDOMINIUMS
The New York City Department of Finance will require all condominium floor plans to be submitted to the Office of the City Surveyor on 8" x 11" paper.  This will facilitate recording and viewing in ACRIS.  In addition, on the subject of condominiums, the New York City Register will accept for recording Condominium Declarations and Floor Plans in any of its City Register Offices (except Staten Island), regardless of the county within New York City where the property is located.  The official effective date of this change is to be determined.

FEDERAL TAX LIENS
The IRS has developed new options for taxpayers that will facilitate the refinancing or sale of a home against which a federal tax lien(s) has been filed.  On December 16, 2008, the IRS announced an expedited procedure that will make it easier for financially distressed homeowners to avoid having a federal tax lien block refinancing of mortgages or the sale of a home.  Taxpayers or their representatives, such as their lenders, may request that the IRS make a tax lien secondary (subordinate) to the lien to be issued by the lending institution that is refinancing or restructuring a loan.  Alternately, under certain circumstances taxpayers or their representatives may request that the IRS discharge its claim if the home is being sold for less than the amount of the mortgage lien.  The process to request a discharge or a subordination of a tax lien takes approximately 30 days after the submission of the completed application, but the IRS will work to speed up the processing of these requests in the wake of the economic downturn.  Instructions and more detailed information can be found at the IRS website www.irs.gov.
 
EQUALIZATION AND ASSESSMENT FORM
The filing fee for the Equalization and Assessment Form (also known as the RP-5217 and RP-5217NYC) is to be increased for all deeds submitted for recording on or after June 1, 2009.  Property transferred as "qualifying residential property or qualifying farm property" will see an increase in the filing fee from $75.00 to $125.00.  As to the filing fee for any other property, the fee will be increased from $165.00 to $250.00.  When the Equalization and Assessment form is not required to be filed, such as with the transfer of a cooperative interest or of a controlling economic interest, the fee to file the New York City Real Property Transfer Tax Return will be increased from $50.00 to $100.00.
 
NEW YORK CITY PRELIMINARY RESIDENTIAL PROPERTY TRANSFER FORM
In New York City, a Preliminary Residential Property Transfer Form is required to be filed when recording a deed or a lease of a building that is a multiple dwelling unless an affidavit is submitted that the premises is not a multiple dwelling (known as an Affidavit In Lieu Of Registration Statement).  As of May 3, 2009, a Preliminary Residential Property Transfer Form must be filed for all one and two family dwellings where neither the owner nor any family member occupies the dwelling.  A family member is defined as an owner's spouse, domestic partner, parent, parent-in-law, child, sibling, sibling-in-law, grandparent, or grandchild.
 
NEW YORK STATE REVISED IT-2663 & IT-2664
The New York State Department of Taxation and Finance has issued a revised 2009 version of the Non-Resident Real Property Estimated Income Tax Payment Form (IT-2663) and Non-Resident Cooperative Unit Estimated Income Tax Payment Form (IT-2664).  The revised versions of these forms can be identified by the following reference on the document: "(4/09)".  The prior versions of these 2009 forms are not to be used.  The change in the forms was the result of the recent change in the applicable personal income tax rate of the sale or transfer of real property in New York from 6.85% to 8.97%.  To obtain a copy of these revised forms, visit the New York State Department of Taxation and Finance website at www.tax.state.ny.us.
 
If you have any questions about this article or would like further information, please contact Michael Alfieri, Esq. at (212) 651-1200 or malfieri@prestitle.com.
 

Prestige Title Agency, Inc. provides Commercial and Residential Title Services Nationwide.  For more information, please contact Anthony Chiellino at (212) 651-1200 or achiellino@prestitle.com.

  15 W. 39th St., 10th Fl. New York, NY 10018 (212) 651-1200 Fax (212) 651-1201
Member of New York State Land Title Association Member of American Land Title Association