A construction lien provides contractors, subcontractors and suppliers a security interest in the property that was improved, which enables them to compel payment for work that they have not been paid for. However, because of the impact a lien has on the property and consequently the property owner, there are significant defenses for the wrongful filing of a lien. To protect the interest of all parties concerned, the lien process is complex and must be followed precisely.
Who Can File
Based on the terms of a written contract, there is wide latitude given in who can file a construction lien. Essentially, whoever supplies labor, materials or supplies that are used, consumed or incorporated into a construction project can get a lien. Liens can be applied to a residential or commercial property.
Rules for Residential Construction
Generally speaking, the rules for filing a lien stemming from a residential project are stricter than for a commercial one. To initiate the claim, the contractor or supplier must file a Notice of Unpaid Balance and Right to File Lien within 60 days from when the last work occurred. The lien claimant must then file a demand for arbitration within 10 days, and the arbitrator will determine the validity and amount of the lien. The claimant than has 10 days from the arbitrator’s decision, which also must be within 120 days of the last work performed, to file the actual lien.
Strict Compliance vs Substantial Compliance
If you do not strictly adhere to the procedural requirements of filing, you may not be permitted to file the lien. Even worse, if you file inappropriately or for an amount that is unwarranted, you could be liable for costs and attorney’s fees associated with correcting the error.
A Lien Does Not Last Forever
Because a lien is such a significant cloud on the title of the subject property, courts typically require the lien holder to initiate foreclosure proceedings on the property or otherwise perfect the lien in a timely manner. Failure to do so may result in forfeiture of your rights.
Contact a Construction Lien Attorney for Legal Advice
If you have been unpaid on a construction project or believe a lien has been unfairly placed on your property, you need to understand your rights. To explore the options you may have in your case, call Snellings Law LLC at (973) 265-6100.