If your business plans to file a construction lien in order to seek payment for work that has been completed, New Jersey law requires you to do so within 90 days from the last date that any construction work was completed. If you want to file a claim to foreclose a lien, you must file that lawsuit within one year from the last date of completed work.
Residential project requirements
Residential projects include any places where there are residences. This includes hybrid commercial/residential buildings.
Residential projects may impose additional requirements that you must meet before you file a construction lien. If an arbitration award authorizes your lien, you must file it within 120 days of when you last furnished contract services or materials. Additional requirements apply to all filings of an unpaid balance within 60 days of the last furnishing of service. Favorable arbitration awards that allow the filing of the lien also apply under such circumstances.
Once this is accomplished, then you can file the lien itself. To protect your rights within the regulations of the lien, you must file strictly within 120 days of the last service or materials you furnished.
The arbitrator, typically chosen by the American Arbitration Association if no alternative arbitrator is agreed upon by both parties, has a timeline of 30 days to come to a decision about your lien. It is typical to lose several days during the selection process as well as during the forwarding of an AAA award, so you should react within 45 to 50 days of the last furnishing of materials to ensure sufficient time to file a construction lien.
Commercial and residential project differences and similarities
The definition of the term residential construction has caused some considerable confusion and debate within the topic of construction liens. If you seek to claim a construction lien that involves any improvement made to a single- or two-family home or a large number of units in which individuals and families dwell, you will more than likely have to deal with a residential constructing contract. Relevant authorities also typically consider multi-unit senior housing provided by a commercial company or operator as residential construction.
It is advisable to consult with an attorney if the designation of your construction project is at all in question. If there are any doubts, the delay could be advantageous to the other party. This could result in the loss of the unpaid balance owed to you.
The easiest way to settle doubts regarding the nature of your contract is to consult with an attorney who has significant experience in construction law and collections. Filing after enough time has passed to determine the unpaid status of the client but still early enough to meet county clerk deadlines is essential. However, it is only one part of the process of filing a construction lien.
An attorney may be able to tell you whether your project falls under residential or commercial regulations. It is common for such regulations to vary significantly from one state to another and even between counties. Therefore, determining the status of your claim with certainty is essential. It will make sure that you do not meet any deadlines or overlook any supporting documentation.
How does the construction lien timeline work?
In the case of either a commercial or residential project, the steps involved are basically the same. Residential projects will require the filing of a Notice of Unpaid balance and arbitration prior to the granting of a lien. A typical construction lien timeline will unfold like so.
1. Completion of Work
You may not initiate a lien for services that have not yet been rendered. This includes services agreed to outside of the contract period or services that have yet to be provided under the terms of the contract. Once the work has been completed and your end of the contract is satisfied, you may then place a lien on a property.
If you are working on a commercial (only property) you can skip to step 4.
2. Notice of Unpaid Balance (Residential)
Residential contractors are required to file a notice of unpaid balance (NUB) within 60 days of the last completed work. The NUB should be filed as soon as possible to allow enough time for the satisfaction of the claim.
Once the NUB has been filed, the claimant has 10 days to contact the offending property owner, contractor, or subcontractor and file a demand for arbitration with the AAA. NUBs should be filed by either a personal service or sent via certified mail to ensure receipt of the notice.
Commercial contractors are not required to file a NUB.
3. AAA Will Decide Your Lien Claim (Residential)
The AAA has 30 days to make a decision regarding your lien claim. The claimant has 10 days from the arbitrator’s decision (and 120 days from the date of last completed work) to file a lien. If that time has elapsed, then the claimant cannot file a lien.
4. Filing a Construction Lien
Commercial owners have 90 days from the date of the last completed work to file a lien against the offending party. The lien must be filed with the county clerk in the jurisdiction where the work was completed.
After the lien claim has been filed with the county clerk, the claimant has 10 days to serve a copy of the claim against the offending party.
5. File a Lawsuit to Assert the Lien Claim
The owner of the property against whom the lien is file can compel the claimant to file suit within 30 days. If they don’t, the claimant has one year from the last date of completed work to initiate a lawsuit. Lien lawsuits cannot be filed outside this time period.
6. Discharging the Lien
After a decision has been reached in the lawsuit or the offending party has satisfied their end of the contract, the lien holder has 30 days to discharge the lien. Failure to discharge the lien within 30 days of resolution will result in penalties that include the payment of court fees, attorney’s fees for the offending party, and any damages incurred as a result of the lien still being present on the property after resolution.
Contact a NJ Construction Lien Attorney for Help With Complicated Lien Matters
Contact Snellings Law LLC today for more information on filing construction liens or about the construction lien timeline.
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