Although it is typical for AIA form contracts to contain arbitration clauses, as a contractor you should consider whether you should have an arbitration clause in your construction agreement. As discussed below, there are numerous factors to consider in determining whether mandatory arbitration is the preferred dispute resolution mechanism, or whether the state court system is preferred. Although arbitration may have some advantages, there are also disadvantages which must be considered rather than simply adopting the AIA form. Continue Reading Should I Have an Arbitration Clause in My Construction Contract?

Whether you are a general contractor or a subcontractor, you have probably come across a pay when paid clause within a subcontract or general contract. The idea of the clause is that the contractor or subcontractor would not be responsible for payment to a lower-tier contractor unless and until it has received payment pursuant to its contract with an upper-tier contractor or owner. While this is a good idea, the Courts have often found such provisions to be unenforceable.

Continue Reading Pay When Paid Clauses in Construction Contracts

In general, a contractor, subcontractor, or supplier is entitled to file a construction lien on a commercial project provided that the lien is filed within 90 days of the last date the entity provided materials or services with regard to the subject project. There are certain requirements, however, that must be met prior to being able to file a construction lien.

The first requirement is Continue Reading Your Right to File a Construction Lien on a Commercial Project

At times, it may become necessary to amend a construction lien claim after if it is initially filed. The relevant statutory authority which addresses this issue is codified by N.J.S.A. 2A:44A-11. In general, this section provides that a lien claim may be amended for any appropriate reason, including but not limited to, correcting inaccuracies in the lien claim or errors in the original form, or revising the amount claimed in the lien claim. Continue Reading Amending a Construction Lien Claim

As the owner of a parcel of property, you might someday be faced with a scenario wherein a construction lien filed by a contractor who performed work for you was either improperly filed, or is simply invalid on its face. The issue becomes what is the proper way to remove and/or discharge this construction lien so that the property is no longer encumbered.

Continue Reading Removing an Invalid Construction Lien

If you are either a subcontractor or a material supplier on a municipal project and you are not receiving payment from the general contractor or subcontractor, you may have to bring a claim against a payment bond posted by the general contractor. In order to be entitled to make a claim against such a bond, it is important that you follow the protocol required by the relevant New Jersey Statutes. If you do not follow this protocol, you may be barred from making a claim against the bond.

In the relevant New Jersey Lien Law, N.J.S.A. Section 2A:44-145, it explains that a person who does not have a direct contractual relationship with a contractor must provide explicit written notice to the contractor, which explains that the person is an intended beneficiary under the bond. Only after this written notification is provided does that person have the ability to bring forth a claim, and that right commences the day the notice is presented.

Continue Reading Making a Claim Against a Bond on a Municipal Project

In construction projects that are performed either on behalf of a municipality or a state agency, a general contractor and potentially a sub-contractor are typically required to post payment and/or performance bonds with the county or municipality. A general contractor or sub-contractor is required to post a payment and/or performance bond, because this ensures that sub-contractors or suppliers are paid, and enables the Township or state agency to have the work completed should the contractor fail to do so in a timely fashion. As a supplier or sub-contractor on such a municipal or state project, it is important to know your rights with regard to making a claim against a payment bond.

The most important thing that any sub-contractor or supplier must do prior to providing materials or services for a public contract is to provide the proper notice as required by N.J.S.A. 2A.44-145. This strict notice requirement specifies that the sub-contractor or supplier notify the party who posted the payment bond for the project in writing via certified mail of their intent to provide materials or services for the project. This is a prerequisite to being able to make a claim against the bond, or to receive a payment for materials and services with regard to the project if they are not paid by the sub-contractor or general contractor. As such, it is very important that any sub-contractor or supplier provide the appropriate notice to the party that posted the bond prior to performing any work or providing any materials.

Continue Reading Making a Claim against a Payment Bond Posted by a General Contractor or Sub-Contractor

When you are either purchasing or selling a residence, you will become familiar with the Seller’s Disclosure Statement which is provided by a seller of a residence. This Statement is designed to disclose all known defects and/or issues with the residence to a purchaser. While some of the issues may be readily apparent to the purchaser of the residence, there are times when issues are latent, or hidden, in nature. The well established law in this area provides that it is the duty of the seller to disclose any latent defects of a residence if they either knew or have constructive knowledge of the existence of the condition. The types of conditions which must be disclosed are those which are material to the transaction and which may directly affect a purchaser’s decision to purchase a residence.

Should a seller not disclose these latent defects, which are material to the transaction, to a purchaser, the purchaser may be able to rescind the transaction or obtain monetary damages if it is demonstrated that the seller either knew or constructively knew of the issues affecting the property. Material defects can concern issues with the structure, the property surrounding the structure, or even nearby conditions which may affect the residence. Obviously, if a condition is hidden and it appears to have been concealed by the seller, this may favor the purchaser and may allow them to either rescind the contract or to obtain damages.

If a lawsuit is commenced to rescind the contract or to obtain monetary damages, the relief which is granted will depend upon numerous circumstances concerning the extent of the condition and how it affects the property. Which remedy is more appropriate is to be determined on a case by case basis. Regardless, it is always the best practice to disclose all conditions known by a seller. This avoids the possibility of future litigation by a purchaser. On the other hand, it is a good idea if you are the purchaser of a residence to specifically inquire as to all conditions, whether they are readily apparent or latent. This may protect you if a latent defect later comes to light which should have been disclosed.

If you are being sued for a latent defect which a purchaser claims you had knowledge of, or if you are a buyer who wishes to sue a seller for a latent defect, it is recommended that you consult with competent counsel. The attorneys at Stark & Stark can help you in this regard.