The construction lien presents a powerful collection tool available to contractors who work on real property. However, abuse of a construction lien can lead to significant penalties. A skilled New Jersey commercial collection attorney can explain what you need to know.
How a Construction Lien Is Used
When contractors do work on a home, they often don’t receive full payment until the job is complete. This can lead to significant financial exposure in the event the owner defaults on the contract, financing falls through or the contractor is otherwise not paid for the work performed. Construction liens may be available for general contractors, plumbers, painters, artisans or other subcontractors who have performed improvements on the property.
Conditions for Filing a Construction Lien
When a contractor goes unpaid for work performed, he or she has the option of filing a lien against the property. As a threshold, the contract for work must be in writing. The lien is filed at the county level and becomes what’s called an encumbrance against the property. This means that the homeowner cannot sell or refinance the property without first satisfying the lien and having it discharged.
Remedies for Construction Lien Abuse
As indicated above, construction liens can impact the owner’s ability to transfer title to his or her property. This is therefore a powerful collections tool if the owner needs to liquidate the asset to pay other debts. As such, construction lien abuse carries serious penalties. If a frivolous construction lien is filed, the contractor may be responsible to pay for the owner’s attorney fees spent in getting the lien discharged.
Whether you are an unpaid contractor or a homeowner who has had a lien filed against your property, it is critical that you get sound legal advice about your best options going forward.
For expert help in prosecuting or defending a construction lien, talk to a seasoned New Jersey commercial collection lawyer at the offices of Snellings Law, LLC. Call (973) 265-6100 to set up an appointment for your initial consultation.