STA Partners with ESSA to Close a Loophole in the Lien Law, by Andrew Richards, Esq., published by STA Legal Log, 3-13-2026

Andrew Richards, Co-Chair of KD’s Construction Law Practice Group and Co-Managing Partner of the firm’s Long Island office, and legal counsel to the Subcontractors Trade Association (STA), was featured in STA’s Legal Log for his instrumental role in identifying a critical gap in New York’s General Obligations Law affecting subcontractors’ lien rights. He collaborated with STA and the Empire State Subcontractors Association (ESSA) to develop legislation aimed at closing a significant loophole in New York’s Lien Law.

Subcontractors Trade Association (STA) and Empire State Subcontractors Association (ESSA) have been leading efforts to address gaps in New York law that leave subcontractors and suppliers vulnerable to nonpayment and unfair contractual restrictions. Through sustained advocacy, we have worked to identify practical legislative solutions that strengthen protections for subcontractors and ensure greater fairness and accountability in the construction industry.

STA General Counsel Andrew Richards, construction practice co-chair at Kaufman Dolowich, identified a gap in New York’s General Obligations Law that could impact the lien rights of subcontractors and worked with STA and ESSA to draft legislation that would close a significant loophole in New York’s Lien Law.

As Andrew Richards has previously written, many prime contracts require subcontractors to file a mechanic’s lien in strict compliance with the Lien Law, fully prosecute that lien claim, and even exhaust collection efforts on any judgment for amounts owed before the subcontractor may commence an action directly against the prime contractor or its surety on a payment bond.

While New York General Obligations Law § 5-322.1(2) (the “Statute”) renders such condition precedents void and unenforceable with respect to payment bond claims, courts have nevertheless upheld these provisions when applied to breach of contract claims brought by subcontractors directly against general contractors. As a result, STA and ESSA are advancing legislation to amend the Statute to include as void and unenforceable any contract provision conditioning a subcontractor’s or material supplier’s right to assert direct claims against a general contractor in addition to a claim against a payment bond.

This amendment is critical because the current gap in the Statute can force subcontractors and suppliers to forfeit otherwise valid legal rights due to the expiration of contractual or statutory limitations periods. The time allowed to bring breach of contract claims may expire while subcontractors are compelled to pursue lengthy lien litigation or other remedies involving additional parties, proceedings that may ultimately have no bearing on the liability of the general contractor.

Moreover, most private improvement projects do not require payment bonds, and even when a payment bond exists, it may impose shorter contractual limitations periods than the six-year statutory period for breach of contract claims. As a result, subcontractors can lose their ability to pursue legitimate claims before they have had a fair opportunity to establish liability and recover damages.

This outcome is both inequitable and contrary to the intent of the Statute, exposing subcontractors to significant and unnecessary financial risk. The proposed amendment will close this loophole by ensuring that subcontractors and suppliers retain the ability to assert direct claims against general contractors without being forced into procedural hurdles that effectively extinguish their rights before those claims can be heard.