When contractors or suppliers are unpaid on a New Jersey construction project, they can protect their rights by filing a mechanics lien. This legal tool grants the unpaid party a security interest in the property and is governed by the New Jersey Construction Lien Law.
At CRM Lien Services, we specialize in ensuring that you get paid quickly and reliably. We can prepare and file mechanics liens for you, taking into account New Jersey construction lien law and state-specific rules and regulations, including the need for an adequate and ascertainable description of the real estate.
This guide outlines the essential rules, deadlines, and steps for filing a mechanics lien New Jersey.
Key Takeaways
- Comprehensive Lien Rights: New Jersey provides broad mechanics lien rights to various project participants, including general contractors, subcontractors, and material suppliers. Jersey’s construction lien law ensures that suppliers to suppliers also have lien rights within specific tiers, expanding protection for those involved in construction projects.
- Strict Deadlines: Filing deadlines differ between residential and non-residential projects. Non-residential liens must be filed within 90 days, while residential liens have a 120-day deadline, including a mandatory arbitration step before filing.
- Mandatory Notices and Compliance: Adherence to New Jersey’s specific notice requirements and proper lien form completion is crucial. Non-compliance, such as missing notarization or incorrect property descriptions, can invalidate the lien, jeopardizing the claimant’s ability to secure payment.
Who Can File a New Jersey Mechanics Lien?
In New Jersey, mechanics lien rights extend to general contractors, subcontractors, laborers, material and equipment suppliers, architects, engineers, surveyors, and construction managers. A limited liability company can also file a mechanics lien if they meet the necessary criteria.
Previously, New Jersey did not grant lien rights to suppliers of suppliers, but this changed in 2011. Now, a supplier to a supplier can file a mechanics lien, but only within the first three tiers. This means that a supplier to a supplier who contracts directly with the property owner can claim a lien, while one who contracts with a party other than the owner cannot.
However, sub-sub-subcontractors and suppliers to sub-subs or lower tiers do not have lien rights in New Jersey.
Can I File a New Jersey Mechanics Lien If I’m Unlicensed?
Yes, in New Jersey, there are no licensing requirements that restrict the ability to file a mechanics lien. However, it’s generally not recommended to undertake work without the necessary license if one is required.
When Is the Deadline to File a New Jersey Mechanics Lien?
Non-Residential Projects:
For non-residential properties in New Jersey, a mechanics lien must be filed within 90 days from the last day the claimant provided labor or materials for the project.
Residential Projects:
On residential properties, the mechanics lien must be filed within 120 days of the claimant’s last date of work or material supply. Additionally, it must be recorded no later than 10 days after receiving the arbitrator’s decision. Given that the arbitrator may take up to 30 days to decide, and time may be needed to select the arbitrator, it is crucial for a lien claimant to act swiftly when preparing to file a residential construction lien. The deadlines and requirements are particularly important for those working under a residential construction contract.
What Information Should I Include in a New Jersey Mechanics Lien?
A New Jersey Construction Lien Claim must include the specific language required by NJ Stat. §2A:44A-8 and should provide the following details:
- Name and address of the claimant (including the business entity if applicable)
- Name of the property owner
- Detailed property description (block and lot numbers, municipality, and county)
- Amount claimed (calculated using the provided formula)
- Interest the lien is claimed against (such as owner, unit owner, or community association)
- Date of the contract
- Name and address of the hiring party
- Description of the labor and/or materials supplied
- Last date of providing labor and/or materials
- Indication of whether the project is residential or non-residential
- Date and recording information of a filed Notice of Unpaid Balance and Right to File Lien (if applicable)
- Arbitration award amount and date (if applicable)
Additionally, the information must comply with the stipulations outlined in ‘318 c 2a 44a’.
Can I Include Attorney’s Fees, Collection Costs, or Other Amounts in the Lien Total?
No, the amount of a mechanics lien in New Jersey covers only the unpaid contract balance, minus any mechanics liens filed by others under your contract. However, in a foreclosure action, the court may award attorney’s fees if the defendant presents a defense without merit.
Will My New Jersey Lien Have Priority Over Pre-existing Mortgages or Construction Loans?
Generally, no. The priority of a New Jersey mechanics lien is determined by its filing date, following the “first in time” rule. The priority of a mechanics lien is determined by its filing date and the legal context of ‘real property arising pursuant’ to the lien. However, a later-recorded mortgage may take priority over a mechanics lien if the mortgage funds were used for specific purposes, as detailed by New Jersey statutes (typically related to construction liens).
If a preliminary notice is filed before the permanent financing is recorded, the mechanics lien will take precedence over the permanent mortgage but not over the construction mortgage. A mechanics lien can also have priority over an earlier conveyance, lease, or mortgage if a Notice of Unpaid Balance and Right to File Lien is recorded before the prior encumbrance is filed.
When it comes to competing mechanics liens, priority is based on the date of attachment. If multiple liens share the same attachment date, they will share the proceeds from a foreclosure sale on a pro-rata basis.
Who Needs to Send a New Jersey Preliminary Notice on Private Projects?
Non-Residential Projects:
While a preliminary notice is not mandatory to secure lien rights, it offers certain benefits. Filing a Notice of Unpaid Balance & Right to Lien (NUB) can help a mechanics lien gain priority over other encumbrances on the property or over subsequent buyers if a transaction takes place after the notice is filed. The preliminary notice should clearly identify the property subject to the lien claim.
Residential Projects:
For residential projects, every potential claimant must file and serve a Notice of Unpaid Balance & Right to Lien to be eligible to file a New Jersey mechanics lien. Additionally, claimants must serve a demand for arbitration, either through the American Arbitration Association or another ADR provider specified in the contract. This must include a completed and signed Notice of Unpaid Balance & Right to Lien, along with an affidavit confirming that the notice has been recorded.
Who Do I Need to Send a New Jersey Preliminary Notice To?
Non-Residential Projects:
For non-residential projects, the notice only needs to be filed with the county clerk’s office in the county where the property is located. However, it is advisable to also send a copy to the property owner and the general contractor, if applicable.
Residential Projects:
On residential projects, the notice must be filed with the county clerk’s office in the county where the property is located, and it must be served on all parties up the contracting chain. Additionally, the notice should be filed with the American Arbitration Association or another ADR entity if specified in the contract.
5 Essential Things to Know About New Jersey Mechanics Liens
Contractors and suppliers have robust lien rights in New Jersey. If they aren’t paid for their work on a New Jersey project, they can file a lien to expedite payment and safeguard their interests. However, specific rules and requirements must be followed.
Here are five key things to know about New Jersey’s mechanics lien law.
Suppliers to Suppliers Have Lien Rights
A broad range of participants in a project can file a mechanics lien in New Jersey, including general contractors, subcontractors, laborers, material and equipment suppliers, architects, engineers, surveyors, and construction managers.
In 2011, New Jersey expanded lien rights to include suppliers to suppliers, depending on the tier. Only those within the first three tiers, or suppliers directly contracted with the property owner, can file a lien. Sub-sub-subcontractors and suppliers further down the chain do not have lien rights in New Jersey.
Filing Deadlines Vary by Project Type
The deadline for filing a mechanics lien in New Jersey depends on whether the project is residential or non-residential. For non-residential projects, the lien must be filed within 90 days from the last date of labor or material supply, and it must be served to the property owner within 10 business days after recording.
For residential projects, a lien must be filed within 120 days of the last labor or material provided. However, before filing, the claimant must obtain an arbitration award, which typically takes at least 30 days. The lien must also be served to the property owner within 10 business days after it’s recorded.
Preliminary Notice Requirements Differ by Project
The requirement for a preliminary notice also depends on the project type. For residential projects, a Notice of Unpaid Balance and Right to Claim Lien must be filed within 60 days of the last service or material provided.
The claimant must also serve a demand for arbitration, along with a signed Notice of Unpaid Balance and Right to Claim Lien and an affidavit that the notice has been recorded, within 10 days of sending the notice. While filing a Notice of Unpaid Balance is always recommended to preserve lien rights, it’s not mandatory for non-residential projects.
Notice of Unpaid Balance Required for Subs and Suppliers
To file a mechanics lien, subcontractors and suppliers must first file a Notice of Unpaid Balance. This is crucial to ensuring their lien rights are protected.
Notarization of Mechanics Lien Is Mandatory
In New Jersey, notarization of a mechanics lien is mandatory. The lien must be signed by the project participant, though a partner or officer can sign on their behalf. However, the signature of a lawyer or agent is not acceptable as a substitute.
Legal Description Not Required
New Jersey mechanics lien law does not mandate a legal property description. However, the lien form requires an identifiable description of the property, including the block, lot, city, and county. If a block or lot number hasn’t been assigned, it can be omitted, though it’s preferable to include it if possible.
How to File a Mechanics Lien in New Jersey?
Before you dive into filing a mechanics lien in New Jersey, it’s crucial to be aware of specific preliminary notice and timing requirements that must be met to ensure your lien is valid. Filing a lien can be a complex, time-consuming, and sometimes frustrating process. If you’re ready to take on the challenge, follow the steps outlined below.
Follow these steps to successfully file a construction lien in New Jersey.
Jersey mechanics lien filing is a crucial step in securing payment for unpaid work:
- Fill Out the New Jersey Mechanics Lien Form
- Prepare your lien form, ensuring it meets New Jersey’s strict legal requirements.
- Step 1: Prepare the lien form.
- File Your Construction Lien with the County Clerk
- Submit your completed lien form to the clerk’s office in the New Jersey county where the property is located and pay the filing fee.
- Step 2: Record the lien.
- Notify the Property Owner
- Provide a copy of the recorded construction lien to the property owner within 10 days of filing.
- Step 3: Serve notice.
Preparing Your New Jersey Mechanics Lien Claim Form
Mechanics liens in New Jersey are governed by statutes that set forth the specific conditions, rules, and procedures that must be followed to ensure your lien is valid. Strict compliance with these content requirements is crucial; omitting any required information could invalidate your lien.
Filing a mechanics lien can be intimidating, especially if you’re unfamiliar with the process.
Choosing the Right Form
Selecting the correct form is the first step in filing your mechanics lien. While many websites offer mechanics lien forms, they often lack vital sections or may even be invalid.
Important Note About Residential Projects
For residential projects in New Jersey, filing a lien involves multiple steps. One crucial step is filing an arbitration demand with the American Arbitration Association (or another ADR party if specified in the contract) and obtaining an award from the arbitrator granting the right to file the lien. This is a required step before filing a residential lien. Keep in mind that the arbitration process typically takes at least 30 days, often more, so plan accordingly.
Filling Out Your New Jersey Mechanics Lien
A New Jersey mechanics lien must include a significant amount of information. Any missing or incorrect information could result in your lien being rejected, even if it would otherwise be valid. Ensure you fill out this form carefully to get it right the first time.
While a Notice of Unpaid Balance and Right to File a Lien is only explicitly required for residential projects, it is a best practice to file it on non-residential projects as well. Some New Jersey recorders may refuse to record any lien without proof that a Notice of Unpaid Balance and Right to File Lien was filed.
1. Claimant Information
This section requires your complete and accurate information. Be sure to use your full name and address. If you’re filing on behalf of a company, include the full registered business name.
2. Property Owner Information
Identifying the property owner can sometimes be more challenging than expected. If you weren’t hired directly by the property owner, their information might not be readily available in the contract documents. A bit of research may be required to determine the property owner.
Additionally, multiple owners, property sales, or work on multiple units in a condominium can complicate this step. When in doubt, provide as much information as possible.
3. Property Description
While New Jersey mechanics liens don’t require a full legal description of the property, a simple street address is insufficient. The form requires the block number, lot number, city, and county where the property is located. If no block or lot number has been assigned, use metes and bounds or another appropriate description.
4. Amount of Lien
One common question lien claimants have is how to calculate the lien amount. New Jersey provides a clear formula to determine this number, eliminating guesswork.
5. Date of the Written Contract
This section requires the date the original contract was signed by the claimant for the work they are claiming the lien on, not the date of the lien claim.
6. Hiring Party
Include all relevant information about your client. This section should be straightforward, as the necessary details are likely found in your contract documents.
7. Description of Labor & Materials
Provide a brief description of the work or materials you supplied to the project. While an itemized list is unnecessary, ensure you include enough details for a clear understanding of what you provided. The law requires a “specific” description of the work, services, or materials provided under the contract.
8. Date of Last Furnishing
This should be the last date you provided labor, services, materials, or equipment to the project. Do not include dates for warranty calls or other work after the contract was completed or terminated.
9. Signature & Notarization
Once you’ve completed all required information, it’s time to sign the lien claim. However, do not sign until you are in front of a notary, as New Jersey mechanics liens must be notarized to be accepted by the recorder’s office.
Recording Your New Jersey Mechanics Lien
Deadline to File a NJ Mechanics Lien
The filing deadline for a mechanics lien depends on the type of project. For non-residential projects, the deadline is 90 days from the last date you provided labor or materials to the project. For residential projects, the deadline is 120 days after the last day of providing labor or materials, but no later than 10 days after receiving the arbitrator’s decision. As mentioned earlier, residential projects involve additional steps.
Determining the last date of furnishing can be tricky.
Where to File Your New Jersey Mechanics Lien
It’s essential to file your lien claim in the correct county and office. In New Jersey, the general rule is to record your lien claim with the county clerk in the county where the property is located.
To simplify the process, we’ve compiled a list of county offices that record mechanics liens, along with links to their websites:
- Atlantic County Lien Filing (Recorder’s Site)
- Bergen County Lien Filing (Recorder’s Site)
- Burlington County Lien Filing (Recorder’s Site)
- Camden County Lien Filing (Recorder’s Site)
- Cape May County Lien Filing (Recorder’s Site)
- Cumberland County Lien Filing (Recorder’s Site)
- Essex County Lien Filing (Recorder’s Site)
- Gloucester County Lien Filing (Recorder’s Site)
- Hudson County Lien Filing (Recorder’s Site)
- Mercer County Lien Filing (Recorder’s Site)
- Middlesex County Lien Filing (Recorder’s Site)
- Monmouth County Lien Filing (Recorder’s Site)
- Morris County Lien Filing (Recorder’s Site)
- Ocean County Lien Filing (Recorder’s Site)
- Passaic County Lien Filing (Recorder’s Site)
- Salem County Lien Filing (Recorder’s Site)
- Somerset County Lien Filing (Recorder’s Site)
- Sussex County Lien Filing (Recorder’s Site)
- Union County Lien Filing (Recorder’s Site)
- Warren County Lien Filing (Recorder’s Site)
What to Know or Bring When Filing
1. Be Prepared for Your Specific County’s Office
Each county in New Jersey has its own set of filing requirements and fees. Ensure you include the correct recording fees with your lien. Liens are often rejected for improper fees, which can delay the process and potentially result in a missed deadline.
Recording fees vary by county. You can determine the fees by calling the county recorder, checking their website, or asking in person if you file the lien yourself. Fees usually consist of a set amount for the first page and a smaller fee for each additional page.
Additionally, your lien document must comply with any specific margin requirements or cover pages that the county may require. These details can also be confirmed by contacting the recorder’s office.
2. Walk It In, Mail, or Electronically Record
Some New Jersey counties allow mechanics liens to be electronically recorded. If you choose this method, you will need to upload a copy of your lien to the electronic recorder system and follow the instructions provided. Be sure to select the appropriate document type for the county.
If e-recording isn’t available, or you prefer not to use it, you can send the original copy of the lien to the county clerk’s office where the property is located. The lien can be delivered by mail, FedEx, or personally “walked in” for recording (either by you or a courier).
If you mailed your lien for recording, be sure to include a self-addressed stamped envelope with return instructions to receive a copy of the recorded lien for your records and to serve the lien on interested parties.
Serving Notice
In New Jersey, a copy of the lien must be sent to the property owner within 10 days of filing. The copy must be signed, dated, and stamped by the county clerk. If you didn’t contract directly with the property owner, a copy must also be sent to the general contractor.
New Jersey has a unique requirement for serving notice: it must be done two-fold. The copy must be sent by certified mail with a return receipt requested and by regular mail. The enforceability of the lien relies on the completion of service. Although late service doesn’t necessarily invalidate your lien, it could if the other party can prove that the delay prejudiced their position. To avoid this risk, mail out the copies on the same day you file your lien claim.
What to Do After Filing a NJ Mechanics Lien?
Enforce Your Lien
If payment hasn’t been received, you may need to take legal action to enforce (or foreclose) your lien claim. Typically, New Jersey mechanics liens are effective for one year. Remember, the clock starts ticking from the last day of furnishing labor or materials, not the filing date. However, if the property owner sends a written demand to commence action, the claimant has only 30 days from receipt to enforce the lien. Failure to do so will result in the lien expiring.
A foreclosure action is a full lawsuit, generally requiring an attorney and incurring court costs. Consider whether pursuing foreclosure is worth it by comparing the debt amount to the potential costs of litigation. If you’re not ready to take that step, you can send a Notice of Intent to Foreclose. This serves as a final warning that you are prepared to take legal action if you don’t receive payment. Often, this notice is enough to prompt payment without needing to proceed with foreclosure.
Release Your Lien Claim
If your lien claim is eventually satisfied and paid off, New Jersey requires you to file a Certificate of Discharge with the county clerk within 30 days. The certificate must include specific information: the book and page of the lien claim recording, the date of filing, the property location, and the hiring party’s details. If you fail to release the lien within the 30-day window, you may be liable for attorney fees, court costs, and any damages incurred if the other party requests the court to discharge the lien.
Filing a mechanics lien can be a powerful tool to ensure you get paid for your work. The guide above empowers you to take that step when necessary and ensures that you are treated fairly throughout the process.
Get in Touch
Filing a mechanics lien in New Jersey is an essential step for contractors and suppliers seeking to protect their payment rights on construction projects. This powerful legal tool provides a security interest in the property, ensuring that you can recover the compensation you are owed. However, the process involves strict compliance with specific rules, deadlines, and notice requirements.
At CRM Lien Services, we have been serving customers across the country with required reference documentation for lien claims since 1986. We assist property owners in navigating the mechanics lien process, informing them about their rights and responsibilities, including providing notices, securing payment, and releasing mechanic’s liens.
We have a wealth of expertise, are licensed and insured, and have a team of highly knowledgeable document processors. If you’re looking for a straightforward process for filing a mechanics lien, give us a call or shoot us an email.
