Construction Liens in New Jersey

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.

A construction lien is an interest in property given to a contractor, subcontractor which did work, or a vendor which supplied goods, services or equipment that was used in construction on the property.  The lien is powerful because, if the owner attempts to sell the property or apply for a loan, the lien will have to be paid.  It’s a true incentive to pay the contractor!

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.)

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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Getting rid of a construction lien in New Jersey

We are the New Jersey title insurance agent that does it all for you. For your next commercial real estate transaction, house purchase, mortgage refinance, reverse mortgage, or home equity loan, contact us, Vested Land Services LLC. We can help!

Removing an Invalid Construction Lien

New Jersey has a law that protects contractors from customers who refuse to pay.  Formerly known as mechanic's liens, New Jersey calls them Construction Liens.  While the purpose of this post is not to explain the construction lien process, what do you do when there's an invalid construction lien.

Here's an article from the New Jersey law firm of Start & Stark that explains the problem and the remedy.

"As the owner of a parcel of property, you might someday be faced with a scenario wherein a construction lien filed by a contractor who performed work for you was either improperly filed, or is simply invalid on its face. The issue becomes what is the proper way to remove and/or discharge this construction lien so that the property is no longer encumbered.

Although the process for a party to file a construction lien against a residential property, as compared to a commercial property, is different, the relevant section of the New Jersey Lien Law which deals with the discharge of an improper or invalid construction lien is the same. N.J.S.A. 2A:44A-15 provides that if a lien claim is without basis, the amount of lien claim is overstated, or the lien claim is not filed in accordance with the relevant sections of the lien law, nor in the time required by the act, the lien claimant shall forfeit the rights to this lien or any subsequent related lien. In a nut shell, this means that if the lien claim is not timely filed, whether residential or commercial construction, or the lien claim is willfully overstated or is without basis, such as the lack of an enforceable contract, then the lien claim is deemed forfeited. Further, the statute punishes a contractor who does not willfully remove a lien claim as long as notice is given. Any owner who is forced to file an action to remove an invalid lien claim is entitled to reasonable counsel fees and costs incurred in said action.

The next question concerns what is the appropriate process to remove an invalid lien claim. Once you have determined that a lien claim is invalid, whether residential or commercial, the first thing that should be done is that an appropriate notice should be provided to the contractor demanding that the lien claim be discharged. It is suggested that this be done via certified and regular mail and any other delivery alternatives which are available. Once this notice is given, typically a short period of time is given for the lien claim to be discharged. A typical period would be approximately two weeks. If the lien claim is not properly discharged, a Complaint may be filed with the Court in the county wherein the lien claim was filed. This process can be done in a summary fashion pursuant to Rule 4:67, and if successful, would entitle the property owner to counsel fees, costs, and potentially sanctions.

Due to the technical nature of the process involved in removing a lien claim, it is suggested that a property owner consult with an attorney. This attorney should know the appropriate form of the original notification, as well as the process of filing a Complaint to remove the lien claim should the contractor not properly discharge the invalid lien claim. The attorneys at Stark & Stark are equipped to handle such a matter if you have been wrongfully subjected to an invalid or improperly filed lien claim."

For your real estate purchase or mortgage refinance or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Land Services LLC

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 973-227-0645

E-mail sflatow@vested.com

@vestedland

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