January 19, 2009 Legal claims surge in Saratoga County; suppliers, contractors fight for payment
The Business Review (Albany) - by Robin K. Cooper The Business Review
Plumbers, electricians and building material suppliers are filing more legal claims against contractors and home-owners, a signal that the economic downturn continues to squeeze the construction sector.
Subcontractors and suppliers are on pace to file 172 mechanicﾒs liens in Saratoga County this year, a 61 percent increase over last year.
The number of mechanicﾒs liens filed in Schenectady County could top 100 for the second year in a row, an increase of about 25 percent over 2006.
ﾓYou tend to see most of the filings happen in areas where you saw most of the construction activity,ﾔ said attorney Walter Breakell, who represents contractors and material suppliers for his firm, The Breakell Law Firm in Colonie.
ﾓWe havenﾒt seen a significant uptick in liens, but we are early in this current cycle,ﾔ he said. ﾓI think there will be a lot more in 2009.ﾔ
Suppliers and subcontractors have the power to file a lien against a property for work theyﾒve completed or materials theyﾒve delivered but have been unable to collect a payment for.
ﾓWhenever there is a downturn, payments always seem to slow down,ﾔ said Michael Misenhimer, executive director of the Northeastern Subcontractors Association.
Kamco Supply Corp. of New England avoided going to court after reaching a settlement last week with a contractor who was late paying for materials for a project at the Watervliet Arsenal, according to Mark Lane, manager of Kamcoﾒs Albany office.
ﾓWeﾒve got to be a lot more diligent in regards to collecting payments,ﾔ Lane said.
The increase in mechanicﾒs lien fillings is yet another signal that economy is hurting the construction industry. The sector has been hit hard by a decrease in housing sales, a tight credit market and a limited demand for office space.
When times were good, Kamco didnﾒt call about late payments for 40 to 45 days. Now the company calls after 30 days.
ﾓNo one wants to go out and put liens on projects,ﾔ Lane said ﾓOur business is based on relationships. We need to work with people.ﾔ
Kamco has been trying to collect payment for materials purchased by a residential builder who built a house on speculation, but who has been unable to sell it.
For the first time in 18 years, the Albany building supply company is dealing with at least two orders where they might not get paid, Lane said.
ﾓWe find ourselves working with subs a lot more to help them get paid,ﾔ he said. ﾓWeﾒve made calls to general contractors saying, ﾑI donﾒt think you want me liening your project.ﾒﾔ
Not all Capital Region counties have been hit by the increase.
The number of mechanicﾒs liens filed in Albany County was 150 through November, a pace that could match the activity over the past three years when 165 to 168 liens were filed.
Meanwhile, Rensselaer County looks like it will finish the year with a slight decrease in mechanicﾒs lien filings. A total of 86 were filed through Nov. 25. At that rate, the county could finish the year with 94, an 11 percent decrease from 106 filed last year.
Breakell, who also is licensed to practice law in Florida, said subcontractors and suppliers there are a lot worse off.
