While New Jersey’s Construction Lien Law applies to residential and commercial property, this post will take a quick look at construction liens as they affect commercial real estate.
Construction liens provide a method for contractors,
subcontractors and vendors who have not been paid for work they have performed.
However, the procedural and time requirements of New Jersey’s Construction Lien
Law are complex and strictly enforced and a contractor who does not follow them
runs the risk of not getting paid for the work.
Among the kinds of work performed that can give rise to a
construction lien are electrical and plumbing work, carpentry, roofing and the
like.
The law and procedures for commercial property differ in some ways from residential property.
1. A construction lien must be filed within 90 days from the date the last work was performed, or from the last date on which materials, services or equipment was provided. The construction lien is filed with the county clerk for the county where the real estate is located. A Notice of Unpaid Balance need not be filed.
2. A written contract is required.
3. The claimed lien cannot exceed the amount unpaid by the owner under the contract. This amount is called the “lien fund.” Think of the lien fund as the amount still owed by the owner to the contractor.
4. The party wishing to file a construction lien must file a lawsuit within one year of the date of the last work it performed. That time can be shortened by the owner who gives notice to the contractor demanding he file his lawsuit.
Construction liens are just one of the hazards facing the buyers of commercial and residential real estate in New Jersey. It’s something that Vested Land Services LLC checks for during the course of its examination of the title to the real estate.
(This brief summary is not intended as legal advice for which an
attorney at law should always be contacted.)
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