My boss is a general contractor, he completed a job and now they wont pay. My boss wants to know how he can go about placing a lien on the property.
1 reply
Mar 14, 2019
That's a good question, and it's one we get a lot. Before getting too far into the weeds - there are a few resources that should be valuable for those considering filing a New Jersey mechanics lien: (1) How to File a Mechanics Lien in New Jersey; (2) New Jersey Residential Mechanics Liens: A Convoluted Process; and (3) New Jersey Lien & Notice FAQs. Anyway, before deciding to file a mechanics lien, many claimants find that the mere threat or warning of a lien claim will be enough to compel payment. Often, sending a document like a Notice of Intent to Lien will at least get the payment talks going because recipients (typically an owner, their project manager, and even their lender, as applicable) will not want to deal with a mechanics lien filing. Plus, a Notice of Intent to Lien is typically easier (and cheaper) on the claimant as well. If warning or threat is ineffective, then a claimant with the lien process after! You can learn more about this recovery tool here: What is a Notice of Intent to Lien?.
With that in mind, let's look at some specifics of the New Jersey mechanics lien process. First, the mechanics lien filing process will change quite a bit depending on whether or not the project is considered residential. For non-residential jobs, contractors are not required to send preliminary notice prior to filing a mechanics lien. The filing process is simple too, as long as deadlines are followed - for New Jersey non-residential jobs, the deadline to file a mechanics lien will be 90 days from the claimant's last furnishing of labor or materials. Once filed, the lien claimant must serve the owner within 10 days of filing their lien.
For residential jobs, the process is quite a bit more involved. First, let's look at what New Jersey deems a "residential construction contract". § 2A: 44A-2 of the New Jersey mechanics lien statute states that a "'Residential construction contract' means a contract for the construction of, or improvement to, a dwelling, or dwellings or any portion thereof, or a residential unit , or units, or dwellings, or any portion thereof in a real property development." You can find those bolded words also defined under the New Jersey statute, but essentially, they refer to a 1-3 family residence or a unit of a real property development designed to be transferred or sold as a residence - including those that are part of a mixed-use project. So, where work is performed on 1-3 family residential facilities or on residential units that are part of a larger development, the rules become much hairier. As mentioned in this article (which is also linked above), the filing of a mechanics lien on residential property is a three step process: (1) a Notice of Unpaid Balance and Right to File a Lien; (2) the arbitration process; and finally (3) the lien filing itself. Each step will have its own specific deadlines, and the overall process must take place within 120 days of the claimant's last furnishing of labor or materials. For more details on that process, the article above provides a good lay of the land, and the zlien> Payment Rights Advisor can help provide specific timeframes.