When contractors are hired to build or modify structures on private property, New Jersey law allows them to place construction liens against the property if they are not paid promptly for their labor and supplies. It is important for contractors to follow the laws regarding the method by which they can seek and obtain a NJ construction lien. If you need to get a lien and you fail to follow the steps, you risk losing this important method to compel payment for your work.
General Contractors Have a Duty to Pay Subcontractors
Even if a general contractor has not been paid by the property owner, they still must pay the subcontractors for their work. This is a legal duty and not one that they can avoid. Even if a written contract includes a provision that subcontractors will be paid when the general contractor is paid, that provision is considered to be unenforceable under the law.
Payment and Performance Bonds
In any construction project, property owners are allowed to minimize their risk that contractors will not complete the promised work by asking them to get performance bonds. In the event the work called for by the contract is not completed, the property owner may then require the amount of money put up for the bond to make certain the work is completed as contracted. In this situation, the general contractor has a contract with the surety for the bond, and the owner is a third-party beneficiary of that contract. The surety will pay the owner if the general contractor ends up defaulting on their performance duties. If subcontractors performed work for which they were not paid, the surety will also pay at least a portion of the amount owed to them as well. In a government construction contract, contractors are not allowed to place a NJ construction lien against the property if they are not paid. Instead, the contractor may be required to purchase a payment bond in their contract. A payment bond is designed to protect the contractor and the subcontrators who supply labor and supplies for the project to make certain they are paid as promised.
In some cases in which a subcontractor or general contractor seeks to place a NJ construction lien on a property, there may be more than one lien or creditor with claims against it. In that case, one issue will be determining which NJ construction lien has the priority claim. If an owner has not paid for the work and supplies, there may be multiple liens placed against the property from the various subcontractors and the general contractor alike. If you are in that situation, you may want to seek help from an attorney who is familiar with mechanic’s liens. They may be able to help to enforce the lien and to determine whether their client’s lien has priority. If you have not been paid for your work or the supplies you provided, an attorney may also help you to file a lien according to the required time limits under the law. They may also help you to seek payment from the general contractor if they have failed to pay you for your work because the owner has not paid them. If you have performed construction work or supplies for a construction project, you have the right to be paid. Liens provide a mechanism by which you can seek and enforce payment. New Jersey law provides very strict requirements for how soon you must file for a construction lien after you have performed the work or provided the supplies. The paperwork for the lien must also be completed and served in a very specific manner or your lien will not be effective. An attorney may help you to complete it correctly so you can benefit from this important enforcement tool.
Contact a Construction Liens Attorney
To speak with an attorney at Snellings Law LLC about construction liens, call (973) 265-6100.