Construction liens can be a powerful tool for collections in New Jersey on many different types of construction projects, but they must be done properly or else risk significant penalties from the court. If you are a construction worker, supplier, or property owner who needs to file or defend against a construction lien, Snellings Law has the experience you need for your legal case. Call the office or contact us today to learn more about your options when it comes to NJ construction lien law.
What is a Construction Lien?
A construction lien is designed to protect construction professionals from the risk of not being paid for services rendered on a construction site project. This can either be at a residential or commercial site. A lien is a claim made against the property by a person or party that has done work on the property but has not been paid. This option is only available when there is a written contract for work and not simply an oral agreement between parties. The lien is made against the property itself, not the owner of the real estate, but the property cannot be sold or refinanced without first paying off the lien or paying it from the proceeds of a sale. This compels the property owner to pay construction professionals what they are owed if they wish to derive value from the real estate.
Who can File a Construction Lien?
Because construction liens are meant to compensate professionals within the construction business, there are many different parties that are eligible to file a lien for services rendered. These services include, but are not limited to, the following types of work:
- Building additions
- Design work
- HVAC work
- Repairs or renovations
- Tiling, and more
A construction lien can be filed by a contractor to the property or any subcontractors used for the work. Any service provider to a building project is entitled to file a lien if they have not been paid for work performed. However, there are limitations to what falls under work for a construction lien.
Limitations on Construction Liens
Only work performed according to the terms of the contract are eligible for a construction lien, and it must be filed within 90 days from the last day that work was performed for a contractor or supplier. A residential construction must be filed within 120 days. A notice of unpaid balance and to file lien (“NUB”) must be filed within 60 days of the last date of work and an arbitration must be initiated in order to obtain an arbitration award granting permission to file the residential construction lien.
Liens are not applicable for work that has not yet been performed or work that was agreed upon but rescinded for violations to the original contract. In addition, any lost profits on the project are not subject to construction liens, not are damages caused by delay. Construction liens can only be placed on private property and not public works.
Certain types of material and work also do not qualify for a construction lien. Anything purchased for general projects and not a specific construction site does not qualify, nor does feasibility studies or evaluation work on the property. Liens can also only be placed on the real estate where the work occurred and not on any personal property belonging to the owner.
What Happens if a Lien is Invalid?
It is important that an experienced construction lien and collections attorney assists when it comes to this type of work because an invalid lien can come with serious consequences. This applies to liens that are without merit, exaggerate the amount of money owed, liens that are not discharged after the expiry of a lawsuit or payment within 30 days, and for serving a list without a verified claimant.
The damages associated with filing an invalid lien can be substantial. Not only is the construction professional liable for all attorneys’ fees, court costs, and other fees associated with defending the claim, but if the property owner can prove that the invalid lien caused actual damages the construction lien maker may be liable for those damages, as well. One common example of this includes the loss of a sale on the property because of the existence of an invalid lien on the real estate. Talk to an experienced lien and collections attorney to learn more.
Contact Us With Questions About NJ Construction Lien Law
If you would like to speak with a knowledgeable attorney about the filing or defense against a construction lien in New Jersey, Snellings Law is the go-to law firm for liens and collections legal work. Call the office or contact us today to schedule a consultation.