What a Contractor Needs to Know Before Filing a Construction Lien Claim in New Jersey
Whether you or your company operates as a general contractor or a specialty trade contractor in New Jersey, the New Jersey Construction Lien Law provides contractors with the ability to file a lien against privately held real property upon which they have furnished labor, material, services or equipment in connection with improvements to that property.
The proper preparation and timely filing of a Construction Lien Claim, in many cases, affords the contractor a relatively inexpensive but highly effective mechanism to receive payment for the improvements it provided (whether from the property owner or from a general contractor with whom the liening contractor has a written agreement), as opposed to a much more time consuming and costly court proceeding or arbitration.
However, there are certain requirements that must be complied with before a Construction Lien Claim can be filed and enforced pursuant to the New Jersey Construction Lien Law.
There are also additional requirements which must be met in order to file a Construction Lien Claim against residential properties (such as single family homes, townhouse or condominium complexes, etc.). If all of the requirements are not met, the Construction Lien Claim is deemed defective and unenforceable. Even worse, if a defective Construction Lien Claim has been filed and the liening contractor does not immediately discharge the lien upon being notified of the defect by the party whose interests are aggrieved by the lien, the liening contractor can be held liable for all costs incurred by the aggrieved party to discharge the lien, including attorney’s fees.
Requirements for filing a Construction Lien Claim in NJ
1 Must be filed within ninety (90) calendar days of last date of labor, material, service or equipment furnished by liening contractor.
1 A Notice of Unpaid Balance (NUB) must be filed within 60 calendar days of last date of labor, material, service or equipment furnished by liening contractor. If NUB is upheld by mandatory arbitration process, a construction lien claim can then be filed within 120 calendar days from last date of work, material, services or equipment was furnished.
2 The amount claimed by liening contractor must be due pursuant to a written contract or any amendments to the contract, by way of change orders, authorizing the liening contractor to perform the scope of work upon which the lien is based.
2 The amount claimed due by liening contractor must be pursuant to a written contract signed by the owner of the property against which the lien is filed. Any amendments to the contract upon which the lien is based must also be in writing and signed by the property owner.
3 The liening contractor must either be in contract with the property owner or be a first or second tier subcontractor or supplier to the general contractor.
3 Same as for commercial properties.
4 The lien cannot include an amount of monies for any labor, material, services or equipment which has yet to be furnished and also cannot include lost profits or other consequential damages such as overhead costs associated with project delays.
4 Same as commercial liens. In addition, the lien cannot seek recovery of any monies which the liening contractor is not otherwise entitled to be paid under the parties’ contract at the time the lien is filed, such as monies which are only due after the contractor’s work has passed inspection by the local construction official.
5 The liening contractor must have a currently valid home improvement contractor registration or, in the case of new construction, the appropriate license required by the State of New Jersey.