Mechanic's Liens in New Jersey: What Contractors and Property Owners Need to Know

What Is a Mechanic's Lien?

A mechanic's lien (called a construction lien in New Jersey) is a security interest in real property granted to contractors, subcontractors, and suppliers who have provided labor or materials to improve the property and have not been paid. It is one of the most powerful tools available to construction professionals who are owed money.

New Jersey's Construction Lien Law (N.J.S.A. 2A:44A-1 et seq.) governs the filing and enforcement of construction liens in the state. A properly filed lien attaches to the property and must be satisfied before the property can be sold or refinanced — giving the unpaid contractor significant leverage.

Who Can File a Construction Lien in New Jersey?

The following parties may file a construction lien in New Jersey:

• General contractors — who have a direct contract with the property owner
• Subcontractors — who have a contract with the general contractor
• Sub-subcontractors — who have a contract with a subcontractor
• Suppliers of materials — who supplied materials incorporated into the improvement
• Design professionals — architects and engineers who provided services

Note: Suppliers to suppliers (second-tier material suppliers) generally cannot file a lien under New Jersey law.

Critical Deadlines

New Jersey's Construction Lien Law has strict deadlines that must be followed precisely:

Missing the 90-day deadline is fatal to the lien claim — there are no extensions. This is why it is critical to consult an attorney as soon as payment problems arise.

How to File a Construction Lien in New Jersey

1. Prepare the lien claim — The lien must be in the form prescribed by the Construction Lien Law and include: the name and address of the claimant, the name of the property owner, a description of the work performed or materials supplied, the amount claimed, and a description of the property.

2. File with the county clerk — The lien must be filed with the clerk of the county in which the property is located. There is a filing fee.

3. Serve the property owner — Within 10 days of filing, the lien claimant must serve a copy of the lien on the property owner by certified mail or personal service.

4. File suit within 1 year — A construction lien expires if a lawsuit to enforce it is not filed within 1 year of the date the lien was filed.

Defenses to a Construction Lien

Property owners can challenge a construction lien by:

• Arguing the lien was filed after the 90-day deadline
• Challenging the sufficiency of the lien claim form
• Arguing the claimant did not perform the work or supply the materials claimed
• Posting a lien discharge bond — which substitutes the bond for the property as security and allows the property to be sold or refinanced while the dispute is resolved

Contractor Fraud and the NJ Consumer Fraud Act

When a contractor abandons a project after receiving payment, performs grossly deficient work, or misrepresents their qualifications, the property owner may have claims under the New Jersey Consumer Fraud Act — providing for treble damages and mandatory attorney's fees. This is in addition to any breach of contract claim.

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© 2024 Ibrahim Ahmed Law Group, P.C. All rights reserved. Original content — unauthorized reproduction prohibited. This article is for general informational purposes only and does not constitute legal advice.