New Jersey Construction Lien, Bond Claim & Municipal Mechanic’s Lien
There are 21 counties in New Jersey, so it seems logical to provide you with 21 important facts and features of lien and bond claim rights in the state of New Jersey. Let’s get started!
Private Projects = Construction Lien
If you are furnishing to a private project, you would seek relief via the Construction Lien statute — NJS 2A:44A-1 through 44A-38.
1. On commercial projects, you can file a Notice of Unpaid Balance and Right to File Lien, prior to recording the actual lien. If this notice is filed, the lien, when later filed, will have priority over conveyances after the filing of the notice.
2. On residential projects, the filing of a Notice of Unpaid balance should be done within 60 days from last furnishing and includes a demand for arbitration. Then, an arbitrator is required to decide within 30 days from receipt of the demand.
3. Serving a Notice of Unpaid Balance may greatly improve the chance of successfully filing a valid lien after a project owner or other party files a petition in bankruptcy, allowing the lien to relate back to the Notice of Unpaid Balance.
4. Only those contracting with the owner, the prime contractor or a first-tier subcontractor have the right to a mechanic’s lien.
5. On commercial projects, you should file the lien within 90 days from last furnishing.
6. On residential projects, it’s back to the arbitrator! File the lien within 10 days from determination by the arbitrator that a valid lien shall attach to the improvement, and within 120 days from last furnishing materials or services. Also furnish any bond, letter of credit or funds required by the arbitrator.
7. On both commercial & residential projects, make sure you serve a copy of the lien upon all parties within the ladder of supply, within 10 days from filing the lien.
8. New Jersey is an unpaid balance lien state, and the lien is only enforceable for the unpaid portion of the contract.
9. Enforce your lien by filing suit within 1 year from last furnishing or within 30 days from receipt of a notice to commence suit.
10. Release: a satisfied Notice of Unpaid Balance and/or a Construction Lien must be released within 30 days from satisfaction and within 7 days from demand.
11. Prompt Pay: he owner shall pay the GC within 20 days from receipt of monies and the GC shall pay the subcontractor(s) within 10 days of receipt of monies from the owner. (Check out 2A:30A-2 Payment to prime contractor, subcontractor, subsubcontractor, timely payment; exceptions; disputes; resolution. For additional details!)
Public Projects = Bond Claim & Municipal Mechanic’s Lien
12. Always attempt to get a copy of the payment bond. Generally, on local or school district projects, payment bonds are required for general contracts exceeding $100,000 and on state projects bonds are required for contracts exceeding $200,000.
13. The Port Authority of New Jersey & New York is exempt from bonding requirements.
14. The preliminary notice for the bond claim should be served upon the prime contractor before your first furnishing. You can serve a late preliminary notice; however, your bond claim will only be effective for materials and services provided after serving the notice.
15. The preliminary notice for the municipalmechanic’s lien (aka a lien on funds) should be served within 20 days from first furnishing. You can serve a late preliminary notice; however, your lien will only be effective for materials and services provided after serving the notice.
16. Serve your bond claim within 1 year, less 91 days, from your last furnishing. And, your bond claim must be served at least 91 days prior to filing suit.
17. File the municipal mechanic’s lien within 60 days from completion/acceptance of the project. This lien acts as a claim against any unpaid funds in possession of the public entity.
18. A municipal mechanic’s lien is not available on projects owned by the state of New Jersey or its agencies.
19. File suit to enforce the bond claim after the expiration of 90 days from serving the bond claim, but within 1 year from last furnishing.
20. File suit to enforce the municipal mechanic’s lien within 60 days from completion or acceptance of the project.
21. Release/Withdraw: We recommend withdrawing a satisfied bond claim, and a satisfied municipal mechanic’s lien should be promptly released
Shew! So that’s 21 bits about securing rights to payment in New Jersey. Still have questions? Contact us