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Filing a Lien in New Jersey

Filing a Lien in New Jersey

A lien is a powerful tool for contractors to ensure they are paid for their materials, time, and services.  The procedure and specifics for filing a lien in New Jersey are laid out in N.J.S.A. 2A:44A-1 et seq., also known as the “Construction Lien Law.”  Liens can be filed on commercial and residential properties provided that the different procedures are followed for each.  However, the Construction Lien Law only applies to private construction projects, not public work projects or improvements to property which is owned by a public entity.

A Construction Lien works by attaching the amount of money owed to the real property which was improved.  A prerequisite to obtaining a lien is having a signed contract.  The contract doesn’t need to be official or include provisions regarding the lien, it simply needs to state the work being done or the materials being provided and name a purchase price.  The contract also needs to be signed by both parties.  If there is no signed contract, the contractor’s request to file a lien will not be approved.

The procedure for filing a commercial lien and the procedure for filing a residential lien differ.  Outlined below are the general steps for each:

Residential Lien: 

Step One: Within 60 days of the work being completed and the funds being due the contractor must file a Notice of Unpaid Balance, otherwise known as a “NUB.”

Step Two: Within 10 business days of the filing of the NUB, the contractor must serve, by certified mail, a copy of the NUB on the owner of the improved property against whom the claim is asserted.

Step Three: Within 10 business days of the filing of the Lien Claim, the claimant must file demand for arbitration with the American Arbitration Association, or “AAA”.

Step Four:  Within 30 days of the receipt of the NUB, the arbitrator will make a decision as to whether the lien claim meets the requirements.  If the arbitrator does, he or she will grant the contractor the ability to file the claim with the county clerk.

Step Five:  Within 10 days of the contractor’s receipt of the arbitration decision and within 120 days after contractor finishes work, the contractor must file a Lien Claim with the county clerk of the county the real property is located in.

Step Six: Within ten business days of the filing of a Lien Claim, the contractor must serve, by certified mail, a copy of the Lien Claim on the owner of the improved property against whom the claim is asserted.

Step Seven: 20 days after the Lien Claim is served on the owner, the owner may pay the amount of the claim to the contract, effectively voiding the lien.

Step Eight: Within 1 year of the completion of the contractor’s work, or within 30 days of written demand by owner to contractor to institute a lawsuit, the contractor should file a lawsuit to establish the Lien Claim.  If the lawsuit is not timely filed, the lien may be dismissed and there will be no further chance to establish a valid lien.

Step Nine: Within 30 days of the resolution the claim, the contractor must file a Discharge of Lien Claim showing that the claim was resolved by payment or other satisfaction.

Please note, anytime when the Lien Claim is pending the claim may be discharged if the owner files a bond or a cash deposit equal to 110% of the claim.

Commercial Lien: 

Step One: Within 90 days after the work is completed and the funds from the customer are due, the contractor must file a “Lien Claim” form with the County Clerk in the county in which the improved property is located.  This claim will need to be verified by oath.

Step Two: Within 10 business days of the filing of the Lien Claim, the contractor must serve, by certified mail, a copy of the Lien Claim on the owner of the improved property against whom the claim is asserted.

Step Three: Within 20 days of service, the owner may pay the amount of the claim owed to the contractor and effectively void the lien.

Step Four: Within one year of the completion of work or within 30 days of written demand by owner to contractor to initiate a lawsuit, the contractor must file a lawsuit to establish the Lien Claim.  If the lawsuit is not filed timely, the lien may be dismissed and there will be no further chance to establish a valid lien.

Step Five: Within 30 days of the resolution of the claim, the contractor must file a Discharge of Lien Claim showing that the claim was resolved by payment or other satisfaction.

Please note, anytime when the Lien Claim is pending the claim may be discharged if the owner files a bond or a cash deposit equal to 110% of the claim.

While liens can be useful tools for contractors, it is important to follow these steps exactly and pay close attention to each deadline.  Missing a deadline by a matter of days could bar you from obtaining a valid lien.

Should you have any questions about the process, your eligibility to file a lien, or if you wish to have an attorney file the lien for you, please feel free to contact us at (973) 536-2224 or admin@b-blawgroup.com!