Construction Liens

McLaughlin & Nardi’s New Jersey construction attorneys represent owners, contractors and building suppliers in the prosecution and defense of construction lien claims.

Construction liens are a powerful tool for construction contractors, subcontractors and suppliers to compel payment for work which they have performed. However, wrongful filing can have a significant effect on property owners which have not wrongfully withheld payment, and New Jersey’s Construction Lien Law gives them significant defenses. In addition, construction liens can only be filed when there is a written contract; liens for amounts due on change orders may only be filed if the change order was in writing. The Law gives construction contractors, subcontractors and building suppliers, as well as property owners, protection in payment disputes on construction projects. Our construction lawyers have significant experience in using the Construction Lien Law to fight for the rights of contractors, subcontractors, suppliers and owners.

New Jersey Construction Liens

Construction liens can give contractors, subcontractors and suppliers a security interest in property for which they have made improvements but not been paid. The lien is an important tool to compel payment, because with the lien on the property the owner will in all likelihood not be able to sell it or obtain financing. Indeed, just allowing it to be filed will likely violate the terms of whatever financing the owner has in place. Ultimately, the lien can be foreclosed to pay the debt once a court has determined it is valid.

The construction lien must be filed within ninety days from the last work performed or supplies provided, and served on the owner immediately thereafter. Suit must then be filed within one year.

Many construction industry businesses can file construction liens, including:

• General contractors
• Subcontractors to general contractors, subcontractors, prime contractors, or construction managers
• Licensed architects, engineers and land surveyors
• Construction managers
• Suppliers of building materials which have a written contract with an owner, general contractor, construction manager or subcontractor

A wide range of work can form the basis of a construction lien. Some are obvious, such as construction, excavation, building additions, repairs and renovations, carpentry, masonry, electrical work, HVAC work and siding. However, many other types of work which are not so obvious also provides a basis for filing a construction lien, including design work, site work, rewiring, constructing a dock, landscaping, plumbing, calibration, roofing, tile and flooring, and excavation and installing a permanent generator outside an existing structure even if there is no internal work.

Residential Construction

The requirements for residential construction are stricter than for commercial projects. The contractor, subcontractor or building suppler must file a Notice of Unpaid Balance and Right to File Lien (known as a “NUB”) within sixty days from when the last work was performed or the last materials were supplied. Within ten days after filing the NUB, the contractor or suppler must serve a demand for arbitration; the arbitrator will determine the validity and amount of the lien.

The contractor, subcontractor or building suppler must file the lien within 10 days after receiving the arbitrator’s determination, and within 120 days from when the claimant last supplied materials or performed work.

The Lien Fund

Under New Jersey’s Construction Lien Law, the “lien fund” is the amount to which New Jersey construction liens may attach. The maximum which a lien fund may total is the unpaid portion of the contract price for the work actually performed, determined on the day on which the owner is served with the lien claim.

Property Owner Defenses

Construction liens have extremely complicated requirements, and if they are violated the contractor may in some circumstances be liable to pay the owner’s attorneys fees incurred in getting the lien discharged. Moreover, if the contractor, subcontractor or supplier has filed a lien for money found not to have been due, it may be liable for the owner’s attorneys fees spent in defending the claim and seeking to have the lien discharged. An owner can also have the lien discharged by posting a bond with the Superior Court while the case on the underlying debt is pending.

Contact Our Construction Attorneys

New Jersey’s Construction Lien Law is a complicated area, with strict legal requirements for contractors and suppliers, and technical defenses for owners, which makes it important to work with experienced construction attorneys. E-mail us or call (973) 890-0004 to obtain assistance.