What to Do if a Contractor Damaged Your Property During Construction

 By Kushnick Pallaci PLLC | www.nyconstructionlaw.com

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Introduction

Construction projects—whether on your property or next door—can bring more than just noise and dust. They can bring real damage. At our firm, we frequently hear from property owners, neighbors, and building managers dealing with the aftermath of construction gone wrong: leaking basements, cracked foundations, broken windows, or even collapsed walls.

If you believe a contractor caused property damage during construction in New York, you need to act quickly. Whether it’s a private renovation next door or commercial work across a shared property line, protecting your rights starts with understanding your options.

At Kushnick Pallaci PLLC, we help clients throughout NYC and Long Island hold contractors accountable and recover compensation for damage to their homes and buildings. Here’s what to know if it happens to you.

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Common Types of Construction Damage Claims

Construction sites are inherently risky. When proper safety measures aren’t taken, serious damage can occur—not just to the project site but to neighboring properties. Common types of construction-related property damage include:

• Water intrusion due to improper site grading or exposed walls

• Foundation cracks from excavation or heavy equipment too close to your structure

• Vibration damage caused by pile driving, drilling, or demolition

• Equipment collisions from cranes, trucks, or materials being moved carelessly

• Debris-related damage like falling objects or unsecured fencing

These issues can affect single-family homes, condos, commercial buildings, and even public property. They often happen without warning—and can lead to costly repairs, lost rental income, or long-term structural issues.

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Determining Who’s Liable: GC, Sub, or Owner?

One of the first questions we’re asked is: Who’s responsible for the damage? The answer depends on several factors:

• The general contractor (GC) typically has overall responsibility for the jobsite and safety compliance

• Subcontractors can be held liable for negligence in their specific scope of work (e.g., excavation, plumbing, concrete)

• The property owner or developer may be liable if they controlled or directed the work or failed to address known risks

Responsibility is often defined by contract. That’s why we review contractual relationships and insurance provisions early on to determine who should pay—and whether they’re covered by a valid insurance policy.

We also examine whether the at-fault party violated local building codes or NYC Department of Buildings (DOB) safety regulations, which can support your claim.

Explore more about construction damage and litigation on our website.

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Filing a Claim or Demand Letter

If you’ve suffered damage, it’s critical to send a written demand or notice of claim—even if you’re still gathering evidence. Under New York law, written notice helps preserve your rights and may be required before a lawsuit or insurance claim can proceed.

Here’s how to start:

1. Document the damage immediately: take photos, videos, and gather repair estimates.

2. Notify the contractor, owner, and their insurers in writing.

3. Request their insurance information, including liability policy details.

4. Demand repair or reimbursement, and give a reasonable deadline for response.

If the damage is serious or the responsible party is not cooperating, legal action may be necessary. Our firm regularly prepares formal demand letters, and if needed, we file lawsuits for property damage, contractor negligence, or trespass.

Need help preparing your claim? Visit our page on Property Damage & Construction Disputes to learn how we can assist.

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When You May Need an RPAPL § 881 Petition

Sometimes, even after the damage is discovered, the at-fault party won’t cooperate. In some cases, you may need temporary access to their property to inspect the cause of the damage—or to make emergency repairs. If the neighbor refuses access, you may need to file a petition under RPAPL § 881.

RPAPL § 881 allows property owners in New York to petition the court for a license to access a neighbor’s land when:

• The work is necessary

• Permission is being unreasonably withheld

• There’s no other practical means to complete the repair

This is especially common in NYC brownstones, townhouses, or commercial row buildings. Learn more about your rights under RPAPL § 881 access agreements on our site.

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How Kushnick Pallaci PLLC Recovers for Property Owners

When property damage happens, you need more than just legal guidance—you need someone who can take immediate, strategic action.

At Kushnick Pallaci PLLC, we:

• Investigate the cause of the damage using engineers or inspectors

• Review contracts and insurance coverage to identify all responsible parties

• Send formal demands that trigger insurance coverage or early settlement

• File lawsuits when necessary, including for negligence, trespass, breach of contract, and violations of the Building Code

• Secure temporary court orders for access or emergency repair work

We’ve helped homeowners recover for foundation undermining, collapsed retaining walls, interior flooding, and more—both in pre-litigation settlements and through New York Supreme Court actions.

We also represent co-op boards, building owners, and commercial landlords in high-value construction damage cases across Manhattan, Brooklyn, Queens, and Long Island.

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Conclusion

Construction damage isn’t just frustrating—it can be expensive and legally complex. Whether you’re dealing with water intrusion from next door or structural damage caused by a careless contractor, taking prompt legal action is critical.

Let Kushnick Pallaci PLLC help you protect your property, enforce your rights, and hold the responsible party accountable. We’re New York’s trusted construction law firm—ready to fight when your property is on the line.

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📞 Call Today: (631) 752-7100
📍 Visit Us Online: www.nyconstructionlaw.com
📧 Email: vtp@kushnicklaw.com

🔗 Related Pages:

• Construction Damage & Litigation Services

• RPAPL 881 Access Agreements

• Negligence in Construction Law

How Can I Enforce My Mechanic's Lien in Buffalo?

A mechanic's lien is a wonderful tool but it does not get you paid unless you enforce the lien.  Mechanic's liens are enforced through "lien foreclosure" litigation.  A mechanic's lien is foreclosed upon in much the same way as a mortgage is foreclosed upon.  When you don't pay your mortgage, the bank forecloses and can have the property sold to pay off the debt.  Similarly, when a mechanic's lien is not paid the lienor can foreclose and have the property sold to pay off the debt.

Lien enforcement proceedings are complex, time consuming and usually expensive.  Because of this, it is usually advisable to locate an attorney familiar with the Lien Law and with construction litigation (particularly lien foreclosure litigation).  A knowledgeable attorney can help a lien holder avoid common pitfalls and develop a cost effective plan to enforce the mechanic's lien and secure payment of its outstanding debt.

Vincent T. Pallaci is the managing member of Kushnick Pallaci PLLC.   Kushnick Pallaci PLLC regularly counsels clients on filing and enforcing mechanic's liens.

Foreclosing on a mechanic's lien in Buffalo

Have you filed a mechanic's lien in Buffalo and now are wondering what is next?  Watch the short video below about foreclosing on a mechanic's lien.

Kushnick Pallaci, PLLC represents contractors, subcontractors, suppliers, owners and developers in construction litigation in every county in New York from its offices in Buffalo and Long Island.  

Why Buffalo Should Know and Understand Lien Law Section 76

The Buffalo construction industry should know and understand New York's Lien Law Section 76.  See the video below for more information.  

How Do I File a Mechanic's Lien in Buffalo, NY?

How do I file a mechanic's lien in Buffalo?  The easiest (and best) way to file a mechanic's lien in Buffalo is to hire a professional to do it for you.  But if you choose to file the lien yourself, and attempt to navigate the Lien Law on your own, this information presentation may be of help in understanding the process:

Need Help Getting Paid on Your Construction Contract?

Watch out Buffalo: missing a key deadline could be the difference between getting paid for your work and chasing a debt for years on end.  One of the biggest mistakes that a contractor can make is missing a deadline for a mechanic's lien, a payment bond claim or pursuing a trust diversion claim.  The chart below will help remind you of the important deadlines that every account manager, chief financial officer and controller should know to make sure that past due accounts don't go uncollected forever.

Buffalo Contractors Should Take Care to Maintain Proper Lien Law Trust Records

The Lien Law trust laws, contained within Article 3A of the Lien Law, are something that most contractors have heard of, but very few understand.  This is unfortunate since the Lien Law trust laws are one of the few areas of the law that are, arguably, intended to protect contractors, or more particularly, subcontractors, suppliers and vendors (as opposed to owners).  In a nutshell, Article 3A of the Lien Law requires every "trustee" to keep all funds that he receives on a construction project in a "trust account" for the benefit of the trust beneficiaries. Just who is a trustee is not always clear but the following general guidelines may be helpful:  1) if an owner receives a construction loan the owner is a trustee; 2) a general contractor is always a trustee of funds received from the owner; 3) a subcontractor can be a trustee if he, she or it owes money to a sub-subcontractor, materialman, vendor or supplier; or 4) a sub-subcontractor and beyond can be a trustee under the same circumstances as a subcontractor.  A simple rule of thumb is that if you are receiving money on a construction project in the State of New York and you owe money to someone else for labor or materials that they supplied to you on that same project then you most likely are a Lien Law trustee and all monies that you receive are "trust funds."

Lien Law trustees must pay all beneficiaries of the trust before they can use the funds for non-trust purposes.  Most importantly, you cannot use the funds for another project and you cannot use the funds to take your profit until you have satisfied all trust claims.  While the Lien Law does require you to maintain these funds in a trust account, it is generally accepted that you do not need a separate account for each project.  Rather, you must keep separate books and records for each project.  But keeping the funds in one account is not, in and of itself, a trust violation.  Your books and records for the project should show the name of the project, the date and amount of payments received and the date, amount and payee of each payment made from the trust funds.  For example, if the general contractor (GC) receives a $100,000 payment from Owner (O) on Project X and then pays $25,000 to Subcontractor A, $25,000 to subcontractor B and $25,000 to supplier C, each of those transactions must show up on GC's books and records.  Each would be a proper use of the Lien Law trust funds.  The remaining $25,000 from O on Project X, assuming no other beneficiaries have trust claims, can be used by the GC as it sees fit whether that be to take profit, use on another project or something else.

In the above example, GC gets into trouble when Subcontractor D is still owed money but rather than pay Subcontractor D, GC takes $25,000 to order materials for Project Z.  This scenario results in a Lien Law trust violation.  The consequences can be disastrous for the trustee.  First, the court has the ability to order the trust funds repaid if possible.  Second, diversion of trust funds is a crime that you can be prosecuted for.  Third, diversion of trust funds exposes corporate principals to personal liability.  Fourth, diversion of trust funds exposes the trustee to potential punitive damages and attorneys' fees awards.  In summary, diverting trust funds can put you in a whole heap of trouble.  While troublesome for the trustee, everyone below him that was owed money and was not paid is offered the additional leverage of the trust claim in their pursuit of the money they are due on the project.

Lien Law Section 75 requires all trustees to maintain careful and accurate books and records of all of these trust transactions.  Failure to maintain proper books and records creates a legal presumption that the trust laws have been violated.  While not a final determination, overcoming this presumption in litigation can be very difficult and, in many cases, impossible.  As a beneficiary of the trust, you are allowed, under Lien Law Section 76, to demand that the trustee provide you with a verified statement, in writing, showing each of the entries on the books and records of the trust account.  In other words, if a general contractor tells you he hasn't paid you because the owner hasn't paid him you can demand to see his books and records for the project and the general contractor is legally required to disclose them to you.

Another significant reason to be concerned about the Lien Law trust laws is that a contractor, or contractor's principal, that is found to have diverted trust funds, and is found liable for that diversion, cannot discharge the claim in bankruptcy.  That means the debt will follow the contractor for at least 10 years, and more likely 20 years, and there will be no way for the contractor to get away from it.  While that is a long time to wait, it is an added security for the subcontractors that are not paid as they will be able to pursue their claim notwithstanding a bankruptcy.  Especially in the current economy where many general contractors are declaring bankruptcy, being able to pursue a claim despite the bankruptcy is a strong deterrent against general contractors diverting trust funds instead of paying their subcontractors.

One very important caveat:  a Lien Law trust fund claim has a very short statute of limitations.  It must be brought within 1 year from the time that either the project was completed (if you are a general contractor) or 1 year  from the time that the payment was due from the general contractor or the project was completed, whichever is later (if you are a subcontractor).   Therefore, you must stay on top of anyone that owes you money and keep careful track of the money.  Don't be afraid to exercise your rights under Lien Law Section 76 if you have not been paid and you think someone may have diverted money on the project.  When in doubt, contact your attorney to find out what rights you have and to make sure you preserve any potential claims you may have.  A good construction attorney will be able to use tools such as the demand pursuant to Lien Law Section 8 or the demand for a verified statement pursuant to Lien Law Section 76 to help establish and set up a trust diversion claim for you.

Vincent T. Pallaci is a partner in the New York law firm of Kushnick Pallaci, PLLC.  His practice focuses primarily on the area of construction law including prosecuting and defending claims for diversions of New York Lien Law trust laws.