If you are a contractor or subcontractor in New Jersey who is involved in the construction or renovation of residential structures, you should be aware of the requirements for filing a construction lien on a residence.
This process is markedly different from the filing of a construction lien with regard to a commercial property. The process to file a residential construction lien is outlined within N.J.S.A. 2A:44A-21.
In a commercial construction setting, a construction lien only has to be filed with the county clerk within 90 days of the last date the contractor or vendor provided the materials and services. On the other hand, the process for filing a lien on a residential property is much more involved.
Like a commercial construction lien, a residential construction lien first requires the existence of a written contract. In addition to this requirement, a condition precedent to filing a construction lien with regard to a residential project is that the potential claimant must first file a Notice of Unpaid Balance and Right to File Lien with the county clerk within 90 days of the last day they provided materials or services for the project.
This Notice of Unpaid Balance and Right to File Lien must be served upon the homeowner and any upper tier contractor within 10 days of filing. The next step in the process of perfecting a residential construction lien is that the contractor must file a Demand for Arbitration with the American Arbitration Association to perfect the lien.
At the arbitration hearing, which must be conducted within 30 days of the filing of the Demand, the arbitrator will decide whether the lien claim meets with the requirements of the New Jersey Lien Statute. If so, the arbitrator will grant the lien claimant the ability to file the lien claim with the county clerk.
Thereafter, the claim must be filed within 10 days of the decision of the arbitrator with the county clerk’s office, and then served upon the homeowner and upper tier contractor within 10 days. If the lien claim is not filed with the county clerk within 10 days of the arbitrator’s decision, the lien claim will be deemed invalid.
Upon filing the lien claim with the county, it must be served upon the homeowner as well as any upper tier contractors. Once this has occurred, the lien claim is now deemed perfected. The contractors’ right to commence an action to foreclose upon the lien is similar to those provided under the Commercial Construction Lien Statute.
If a contractor needs assistance in filing a residential construction lien in New Jersey, I suggest they consult with an experienced attorney who is well versed in this process.