Wednesday, May 15, 2013

FOREIGN CORPORATIONS DOING BUSINESS IN NEW YORK - LIEN LAW

From a discussion on a listserv.........

A question arose regarding one's client, a foreign corporation. A foreign corporation doesn't necessarily mean a corporation from another country: it means one organized in another state. So despite the GW Bridge, a New Jersey corporation in Fort Lee that travels 10 minutes to do some work on 181st Street in Manhattan is a foreign corporation.

The NYS Attorney General Office has a memo on their website as to the requirement of why foregin corporations that do business in New York need to file an autrhorization, etc. A link to it is here:


An excellent memo and the bottom line, as it states: “The consequence of doing business without authority is that the organization may not affirmatively use New York courts until it obtains authority and pays all arrears in fees, penalties, and taxes.”

I do many consultations with Superstorm Sandy victims. One of the many issues we are now facing is foreign (out of state) contractors who came in and did repair work, charged high prices, etc. Besides all the issues of home improvement licenses, breach of contract, shoddy work, etc., there is one other issue: granted these foreign contractors may not be able to sue for large balances allegedly due because they were not authorized to do business in NY but there is nothing in the Lien Law that prevents them from filing a mechanics lien.

And that’s what we have – homeowners with liens filed from foreign contractors – some of these homeowners are elderly too and get anxious when their mortgage free home has a lien put on it. And removing the lien can take time and run into legal fees, even assuming they are defective on their face.

So although foreign corporations not authorized to do business should not do business in NY – they do.


 


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