Safeguarding Your Business Transactions


What Is a Construction Lien?

A construction lien also called a mechanic's liens, is a type of legal claim designed to protect contractors, subcontractors, and suppliers from getting paid and enforcing the contracts upon which they provide construction services or materials and supplies.

For example, let’s say you are involved as a contractor for the construction of a new warehouse, namely pouring the foundation, and the project manager is behind on its payments to you. One method to ensure collection of your monies is to file a mechanic’s lien which places an equitable lien against the physical property itself.

A property owner won’t want its title adversely affected and this gives you leverage because the property owner can usually intervene and have the project manager make payment to you so that you will discharge the lien.

Attorney, Michele Ross, sitting on her office chair.
How Do I File a Construction Lien?

In order for a contractor or supplier to file a construction lien, there has to be a valid, working contract in place between the property owner and the party or parties performing the construction on the property or providing the supplies.

There must also be a breach of the provisions of the contract. The breach is generally met when the party fails to pay for the services performed by the contractor. The contractor must then file their claim with the court for a lien to be put on the property.

However, there are intricate statutes that govern the filing of these liens in New Jersey, along with time constraints for doing so. A qualified attorney can assist in the details of making sure that your lien is validly and timely filed and that it serves the necessary purpose intended.

How Long Do You Have to File a Mechanics Lien in NJ?

You have 90 days from when you last furnished labor or materials to a construction project to file a mechanics lien in New Jersey. On residential projects, the deadline is extended to 120 days. Still, you must also file a Notice of Unpaid Balance and Right to File Lien with the county clerk within 60 days of the last day you provided materials or services.

What Are the Consequences of a Mechanic’s Lien?

A mechanic’s lien can have major consequences on the title to your property. If the lien does not get discharged (meaning the contractor doesn’t get paid), there will not be a clear title on the property and ultimately this lien can be foreclosed upon.

A mechanic’s lien can also be problematic if you require continued funding for your project, as many lenders will not lend to an encumbered property. The leverage provided by the filing of a mechanic’s lien can be critical to the successful collection of payment.

Have additional questions regarding a New Jersey mechanic's lien? Call us today at (201) 897-4942 to schedule your consultation with our legal professionals at M. Ross & Associates, LLC.

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