In a significant decision for contractors and property owners alike, the Appellate Division, Second Department, recently clarified the consequences of performing electrical work in New York City without proper licensure. The case, Mikoma Electric, LLC v. Otek Builders, LLC, demonstrates the harsh, but well-established, reality that unlicensed contractors in certain trades—including electrical—may be entirely barred from recovering payment, even if the work was completed and the property owner benefited.
The Facts Behind the Dispute
Otek Builders, LLC was the general contractor on several commercial construction projects owned by WeWork Companies, Inc. For electrical work, Otek hired two affiliated subcontractors: Mikoma Electric, LLC and Mikoma Technology of Power and Lights Wiring and Control LLP (referred to in the case as “Mikoma Tech”).
Mikoma Electric held a valid New York City electrical license. Mikoma Tech did not. Despite this, Mikoma Tech was assigned to perform electrical work on some of the WeWork properties. The permits for that work were pulled in Mikoma Electric’s name, and Mikoma Electric’s licensed electrician supervised the work. Mikoma Tech claimed that its work was lawful because of that supervision and the arrangement with its licensed affiliate.
When the work was completed, Mikoma Tech filed mechanic’s liens and joined in a lawsuit against Otek seeking payment for services rendered. Otek moved to dismiss the complaint and discharge the liens, arguing that Mikoma Tech’s lack of an electrical license made its claims unenforceable under New York City law.
The Trial Court’s Decision
The Supreme Court in Richmond County (Judge Catherine DiDomenico) initially denied Otek’s motion. The trial court reasoned that Mikoma Tech’s arrangement with Mikoma Electric, including the permit filings and supervision by a licensed electrician, raised factual issues that could not be resolved at the pleading stage.
Otek appealed, and the Appellate Division reversed.
The Appellate Division’s Ruling
The Appellate Division held that Mikoma Tech’s failure to obtain the required electrical license was fatal to its claims for breach of contract and to its mechanic’s liens.
Under New York City Administrative Code § 27-3017(a), it is unlawful for any person or entity to perform electrical work in the City unless licensed as a master electrician (or working directly under the supervision of one). The court emphasized that this licensing requirement is strictly enforced. Contractors who fail to comply forfeit the right to sue for payment—even if the work was actually performed under supervision or through a related licensed company.
In the words of the court:
“Licensing statutes are to be strictly construed,” and “so strict has been judicial construction of the statutory requirement through concern for public health and welfare that the requirement may not be satisfied by employing or subletting the work to an appropriately licensed person.”
The court rejected Mikoma Tech’s argument that its connection to Mikoma Electric was enough to allow it to recover. The fact that Mikoma Electric pulled the permits and that its licensed electrician supervised the work did not save Mikoma Tech’s claims. It remained an unlicensed entity performing regulated work in violation of the law.
As a result, the court dismissed Mikoma Tech’s claims and ordered the discharge of its mechanic’s liens.
Why This Case Matters
This decision is a cautionary tale for contractors and developers working in New York City. The City’s licensing rules for electrical, plumbing, and similar trades are not just administrative checkboxes—they are strict legal requirements. Failure to comply can render a contract void and leave a contractor without any right to payment, even if the work was done properly and the owner benefited.
Property owners and general contractors should take note as well. Hiring an unlicensed subcontractor—even one associated with a licensed affiliate—can create major legal risks. If a dispute arises, an unlicensed subcontractor may not be able to assert mechanic’s liens or recover in court. That may sound like a benefit for the owner, but it can also lead to disputes, delays, and liability exposure if lower-tier subcontractors or suppliers are unpaid.
The Takeaway
Whether you’re a subcontractor or a developer, this case drives home a simple but critical message: If your work requires a license in New York City, make sure you have it. Don’t assume that working under another company’s license or under someone else’s supervision is enough to protect your right to payment. In the eyes of the law, it likely won’t be.
At Kushnick Pallaci PLLC, we represent contractors, owners, and developers across New York in construction litigation and compliance matters. If you have questions about licensing, mechanic’s liens, or subcontractor disputes, call us today to protect your rights and avoid costly mistakes.
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