New Jersey State Lien Law Summary

Furnisher of labor, materials, services or equipment, to owner, general, or a first-tier subcontractor, PURSUANT TO A WRITTEN CONTRACT. Licensed architects, engineers, land surveyors, and certified landscape architects have lien rights. NOTE THAT for a supplier, a delivery or order slip referring to the site or project to which the materials were delivered or used, and signed by the person against whom the lien is asserted (or that party’s agent) will be considered a contract. NOTE that if the claimant’s work or services require a license, the claimant will only have lien rights if it is licensed. [2A:44A-2, 2A:44A-3] An invoice that does not reference the site or project to which the materials were delivered will not qualify as a written contract. [2A:44A-3; Legge Industries v. Joseph Kushner Hebrew Academy/JKHA, 333 N.J.Super. 537, 756 A.2d 608 (A.D.2000).] Suppliers to suppliers (as long as they fit within the tiers of claimants described above) are covered, at least where the materials are delivered to the jobsite and incorporated into the project. [2A:44A-2, 2A:44A-3; William G. Burris, Jr. & Son, Inc. v. Hilton Hotels Corp., 214 N.J.Super. 95, 518 A.2d 511 (A.D.1986), certification denied 526 A.2d 201] NOTE ALSO that where the owner overpays the general and the general then files for bankruptcy, the owner will be liable for the difference between the original contract price and the amount the owner paid the general before the sub filed a lien. [AEG Holdings, L.L.C. v. Tri-Gem’s Builders, Inc., 790 A.2d 954 (App. Div. 2002)] NOTE ALSO that where there is a construction manager who is separate from the general contractor, then only those supplying the owner, construction manager or general contractor will have lien rights. [Schor at §31.02[D]] NOTE THAT a supplier has a duty to allocate payments correctly to the buyer’s account relating to the construction project for which the supplies were purchased, therefore the supplier must inquire about the source of payments it receives, and the failure to do so may lead to a finding that the supplier should have known the source of the payment, and the supplier may lose its lien rights. If the supplier has reason to believe something is “amiss” in the customer’s allocation of payments to different accounts, or where the customer does not allocate the funds to any specific account, then the supplier must inquire further to verify the source of the payment funds, and allocate them to the correct project. Failure to do so may forfeit the supplier’s lien rights. [L & W Supply Corp. v. DeSilva, 57 A.3d 558 (N.J.Super.2012)]

AGAINST THE CONTRACTOR’S BOND:

(For state AND municipal projects.) Furnisher of labor or materials to general or 1^st-tier sub. Suppliers to suppliers are not covered. Union benefit funds are covered. [2A:44-143; West Bank Oil, Inc. v. Hartford Acc. and Indem. Co., 205 N.J.Super. 56, 500 A.2d 32 (A.D.1985); Laborers Local Union No. 779 Pension v. American Cas. Co. of Reading, Pa., 771 A.2d 712 (N.J.Super.2000)]

AGAINST THE CONTRACT FUNDS:

(This remedy is only available on public projects that don’t involve the state or state agencies.) First- or second-tier subcontractor, or supplier of labor or materials to a general contractor or a first- or second-tier subcontractor. Suppliers to suppliers are not covered. [2A:44-128; Morris County Indus. Park v. Thomas Nicol Co., 35 N.J. 522, 173 A.2d 414 (1961)]

The owner’s interest in the real property. [2A:44A-3] NOTE that the owner’s liability will be established at the time of the filing of the first effective lien and is limited to the contract funds the owner holds due and owing to the general contractor at the time of serviced of a copy of the lien. [Triple “R” Enterprises v. Pezotti, 779 A.2d 1110 (App. Div. 2001); Labov Mechanical, Inc. v. East Coast Power, L.L.C., 872 A.2d 142 (A.D.2005)] NOTE, however, that the funds held will be limited to the LESSER of the amount due to the general contractor, the subcontractor, and the supplier making the claim. [Sil-Kemp Concrete, Inc. v. Conte & Ricci Const. Co., Not Reported in A.2d, 2005 WL 3742261 (N.J.Super.A.D, 2006)] NOTE THAT a supplier has a duty to allocate payments correctly to the buyer’s account relating to the construction project for which the supplies were purchased, therefore the supplier must inquire about the source of payments it receives, and the failure to do so may lead to a finding that the supplier should have known the source of the payment, and the supplier may lose its lien rights. If the supplier has reason to believe something is “amiss” in the customer’s allocation of payments to different accounts, or where the customer does not allocate the funds to any specific account, then the supplier must inquire further to verify the source of the payment funds, and allocate them to the correct project. Failure to do so may forfeit the supplier’s lien rights. [L & W Supply Corp. v. DeSilva, 57 A.3d 558 (N.J.Super.2012)]

NOTE THAT on a tenant’s project, if the tenant has work performed without written approval of the owner, then only leasehold interest is attached. The lien will attach to the interest of anyone who has expressly authorized the contract in writing, where the writing provides that the person’s interest is subject to a lien for the improvement; where the person has paid or agreed in writing to pay the majority of the cost of the improvement, or is a party to the lease or sublease that created the tenant’s interest, and the lease or sublease provides that the person’s interest is subject to a lien for the improvement. The liability of the person other than the tenant shall be limited to the amount the person agreed in writing to pay, less payments made by or on behalf of that person in good faith prior to the service of the copy of the lien. NOTE that if an interest in the property is lawfully conveyed after the work, services, etc are provided but before the lien attaches, the lien will only attach to the interest retained by the owner who contracted for the work, etc., and not to the interest previously conveyed. [2A:44A-3]

NOTE THAT if work is performed within a unit within a condo or co-op, the lien attaches only to the unit owner’s interest in that unit. NOTE that if an interest in the property is lawfully conveyed after the work, services, etc are provided but before the lien attaches, the lien will only attach to the interest retained by the owner who contracted for the work, etc., and not to the interest previously conveyed. [2A:44A-19]

BUT NOTE THAT where the work involves a condominium, then if the contract is with the owner of the development, then the lien attaches to the interest of the owner of the development; if the contract is with the community association then the lien claim is to be filed against the community association but doesn’t attach to any real property. If the work, services, etc. are provided as part of the common elements of the development, the lien will not attach to the unit owner’s interest. NOTE that if an interest in the property is lawfully conveyed after the work, services, etc are provided but before the lien attaches, the lien will only attach to the interest retained by the owner who contracted for the work, etc., and not to the interest previously conveyed.

[2A:44A-3]

NOTE ALSO that a lien claim cannot exceed amount of claimant’s contract with its customer. [2A:44A-10]

NOTE ALSO that where the property owner overpays the general and the general files for bankruptcy, the owner will be responsible for paying to claimants the difference between the original contract price and the amount the owner paid to the general before the sub filed a lien. [Schor update at §31.02[I]]

CONTRACTOR’S PAYMENT BOND:

However there may not be a bond if the contract amount is less than $100,000. [2A:44-143, 2A:44-144]

FUNDS DUE TO THE CONTRACTOR:

[2A:44-128, 2A:44-129]

OTHER SITUATION:

Note that where a project is a joint public-private partnership, and no bond or other security is provided, a lien against the property – or at least against the leasehold interest – may be allowed. [EnviroFinance Group, LLC v. Environmental Barrier Co., LLC, 113 A.3d 775 (2015)]

RESIDENTIAL CONSTRUCTION CONTRACT:

Every claimant. BUT NOTE THAT there is a lot to do in a short period of time, so it may be best to work together with a local attorney to preserve a claimant’s rights on a residential project. [2A:44A-21] “Residential construction” is construction of or improvement to a one-, two-, or three family dwelling, or any portion thereof, or any residential unit, or any portion thereof, including development projects. [2A:44A-2]

ALL OTHER PROJECTS:

Every claimant wishing to ensure priority over a mortgage or other conveyance filed before the lien is filed. In other words, this notice is NOT a prerequisite to filing a lien, but it is strongly recommended that it be sent, in order to gain priority over prior mortgages, etc. NOTE, HOWEVER, that if this notice is given, a claimant’s lien will relate back, and attach to the owner’s interest in the property as of the date of the commencement of the claimant’s service, in the event the owner files bankruptcy. If the preliminary notice is not given, the claimant’s lien does not attach to the property until the claimant files the lien itself. [2A:44A-20; Schor at §31.02[I]]

CONTRACTOR’S BOND:

All claimants who do not have a direct contract with the contractor furnishing the bond. A joint check agreement is not a direct contract with the contractor. [2A:44-145; Dial Block Co. v. Mastro Masonry Contractors, 13, 863 A.2d 373 (2004)] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Every claimant. There is some question as to whether the notice is required where claimant is supplying the general, but it is strongly recommended to send it in all cases. [2A:44-128]

RESIDENTIAL PROJECTS:

-County clerk

-Owner

-Contractor

-Subcontractor

-American Arbitration Association, unless the parties have otherwise agreed, in writing, to an alternative dispute resolution mechanism. [2A:44A-21]

ALL OTHER PROJECTS:

Clerk of the county in which the property is located. A copy may be given to the owner or other interested parties, but is not required. [2A:44A-20]

CONTRACTOR’S BOND:

General contractor. [2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Municipal clerk, chief financial officer of the county, or chairman of the commission, board or authority, whichever is appropriate. Recommend giving it to the general and sub(s) as well. [2A:44-128]

RESIDENTIAL PROJECTS:

The Notice must be “lodged for record” (filed, essentially – lodging for record is delivering to the County Clerk and the Clerk marks it with a date and time stamp; filing is when the Clerk actually enters it into the ‘Construction Lien Book’) within 60 days after the last date that work, services, etc. were provided for which payment is claimed. Once it is lodged for record, it must be served (and apparently received) upon the other recipients within 10 days. Consider filing sooner rather than later, as there is a lot to get accomplished before the final notice must be given. HOWEVER, unless the parties have agreed in writing to an alternative dispute mechanism, within 10 days from lodging for record the Notice of Unpaid Balance (NUB), the claimant must also serve a demand for arbitration and fulfill all requirements of the American Arbitration Association to institute an expedited proceeding before a single arbitrator, together with a copy of the NUB, and proof by affidavit that the NUB has been lodged for record. A copy of the NUB marked “filed” by the clerk’s office must also ultimately be provided. NOTE ALSO that if a claimant wishes to consolidate its arbitration with another NUB arbitration that has been lodged for record but not yet arbitrated, that request must be included within the claimant’s demand or, if the request is made by someone other than the claimant, made by letter within 5 days of serving the demand for arbitration [2A:44A-20, 2A:44A-21]

ALL OTHER PROJECTS:

As to NONRESIDENTIAL projects, if claimant intends to file notice it must be filed before the final notice. Therefore it must be filed within 90 days of last delivery.

CONTRACTOR’S BOND:

Notice must be received before commencing any work. If given later, notice only covers materials delivered starting on the date the notice is given. [2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Received within 20 days after first performance of delivery. If it is given later, it will cover only the materials supplied on or after the date the notice is filed, and the recovery amount will be limited to the amount owing from the contractor to the sub (claimant’s customer) when the notice is given. [2A:44-128]

ALL CASES:

Please contact Levy von Beck and Associates for form information. This statutory form has a detailed verification section, and should be signed by the claimant, not an attorney. [2A:44A-20]

NOTE that a Notice of Unpaid Balance and Right to File Lien can be amended by filing an Amended Notice of Unpaid Balance and Right to File Lien, presumably within the same time frame. [2A:44A-20]

RESIDENTIAL PROJECTS:

NOTE: There is a lot to do in a short period of time, so it may be best to work together with a local attorney to preserve a claimant’s rights on a residential project.

Please contact Levy von Beck and Associates for form information.  Unless the parties have previously agreed in writing to an alternative dispute resolution mechanism, the claimant must serve a demand for arbitration and fulfill all the requirements and procedures of the American Arbitration Association to institute an expedited proceeding before a single arbitrator designated by the American Arbitration Association. The copy of the Notice of Unpaid Balance (NUB) that is served along with the demand for Arbitration should ideally be marked “filed” by the clerk’s office. In addition, proof by affidavit that the NUB has been lodged for record must be included. If the claimant does not serve a copy of the NUB marked “filed” at this time, it must provide it to the other parties and the arbitrator prior to receiving the arbitrator’s decision. NOTE ALSO that if a claimant wishes to consolidate its arbitration with another NUB arbitration that has been lodged for record but not yet arbitrated, that request must be included within the claimant’s demand or, if the request is made by someone other than the claimant, made by letter within 5 days of serving the demand for arbitration. [2A:44A-21]

CONTRACTOR’S BOND:

Please contact Levy von Beck and Associates for form information. Notice that claimant is a beneficiary of the bond. A joint check agreement does not suffice. [Dial Block Co., Inc. v. Mastro Masonry Contractors, 374 N.J.Super. 13, 863 A.2d 373 (2004); 2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Please contact Levy von Beck and Associates for form information.

Written notice that claimant has furnished labor or materials to the subcontractor. The notice shall contain:

-Name, address and telephone number of the person providing the labor or materials

-Name and geographical location of the public improvement for which the labor or materials have been supplied

-Name of the subcontractor to whom the labor or materials have been supplied

-Description of the labor or materials supplied

-Date that the labor or materials were first supplied to the subcontractor.

NOTE that this form is written in the first person, and should probably be signed by the claimant, rather than an attorney. [2A:44-128]

ALL CASES:

Filed with office of the county clerk. [2A:44A-20]

RESIDENTIAL PROJECTS:

-“Lodged for record” with county clerk

-(A) Personal service, or (B) registered or certified mail or commercial courier whose regular business is delivery service on all the others, AND ordinary mail. Proof of timely mailing satisfies the service requirement. Note that service upon a community association is not required to be served upon individual unit owners. If served late, the lien MAY still be enforceable, unless the recipient can prove that the late service materially prejudiced his or her position; note, however, that disbursement of funds without actual knowledge that lien was filed does constitute evidence of prejudice. [2A:44A-6, 2A:44A-7, 2A:44A-21]

CONTRACTOR’S BOND:

Certified mail or otherwise, but claimant must have proof of delivery of notice. Strongly recommend ensuring delivery. [2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Filed.

An interim notice is not required.

An interim notice is not required.

Every claimant. [2A:44A-6]

Every claimant. [2A:44-132, 2A:44-145] It is strongly advised to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

RESIDENTIAL PROJECTS:

-Lodged for record with county clerk.

-Copy to owner, contractor and subcontractor. [2A:44A-6, 2A:44A-7]

ALL OTHER CASES:

-Lodged for record with the clerk of the county in which the property is located

-Owner or community association

-Contractor

-Subcontractor. [2A:44A-6; 2A:44A-7]

CONTRACTOR’S BOND:

Surety on bond and general contractor. [2A:44-145] NOTE that it is strongly advised to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Chairperson or other head officer or clerk or secretary of the public agency making the contract. [2A:44-132]

RESIDENTIAL PROJECTS:

Not later than 10 days of receiving from arbitrator a copy of his or her determination supporting the lien, and within 120 days following the last date that work, services, material or equipment was provided for which payment is claimed. The copy given to others must be marked “received for filing” or have a similar stamp indicating the date and time it was received by the county clerk. Note that warranty and service calls cannot be used to determine the last day of work, services, etc. were provided. [2A:44A-6, 2A:44A-20, 2A:44A-21]

ALL OTHER CASES:

NOTE: IF YOU ARE GIVING THE NOTICE OF UNPAID BALANCE AND RIGHT TO FILE LIEN, IT MUST BE GIVEN BEFORE FILING A LIEN. See the preliminary notice section above. (If the notice is given the claimant will have priority over prior mortgages and the claimant’s lien will attach as of the first date of claimant’s services, rather than as of the date the lien is filed.)

To Clerk:

Lodged for record within 90 days after claimant last furnished the work, services, materials or equipment for which the payment is claimed (warranty work and service calls do not count for last date of furnishing).   But the sooner the notice is given the better, because the lien will be limited to the lesser of the amount owed to the general, the sub, or the supplier at the time the copy of the lien is served on the owner. NOTE also that the owner’s liability will be established at the time of the filing of the first effective lien and is limited to the contract funds the owner holds due and owing to the general contractor at the time of service. [2A:44A-6, 2A:44A-10, 2A:44A-20; Triple “R” Enterprises v. Pezotti, 779 A.2d 1110 (App. Div. 2001)]

To all others:

Must be mailed within 10 days after lodging for record (though recommend attempting to have it delivered within that time). The copy given to others must be marked “received for filing” or have a similar stamp indicating the date and time it was received by the county clerk.

NOTE that service or warranty work, or other deliveries after termination of claimant’s contract may not be used to determine last date of furnishing labor or materials.

A late lien MIGHT be enforceable, if party served late cannot prove that the late service materially prejudiced its position — but it’s risky and expensive. And besides, if the owner, contractor or sub can show that they disbursed the funds in question without knowledge of the lien, then that will be considered material prejudice, and the lien will be unenforceable. [2A:44A-6, 2A:44A-7]

CONTRACTOR’S BOND:

Received within one year from last date claimant performed labor or delivered materials. Note, however, that suit must be filed more than 90 days after giving notice, but less than 1 year after last delivery, so it is strongly advised that notice is received not later than 3-6 months after last delivery. [2A:44-145] It is strongly advised to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Filed any time before work is completed or accepted by resolution of the agency, or within 60 days thereafter. [2A:44-132]

-Filed with county clerk

-Personal service, or by both (1) certified or registered mail, RRR, or commercial courier whose regular business is delivery service, AND (2) ordinary mail to the last known business or residence address, on owner or community association, contractor or sub. Service upon a community association does not need to be served upon individual unit owners. Note that the copy served others must be marked “received for filing” or have a similar stamp indicating the date and time it was received by the county clerk. Proof of timely mailing satisfies the service requirement. If served late, the lien MAY still be enforceable, unless the recipient can prove that the late service materially prejudiced his or her position; note, however, that disbursement of funds without actual knowledge that lien was filed does constitute evidence of prejudice. [2A:44A-6, 2A:44A-7]

CONTRACTOR’S BOND:

No specific provision; certified or registered mail recommended. [2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

Filed. [2A:44-132]

Claim must be signed, acknowledged and verified by oath of the claimant, a partner, or an officer of claimant. Case law requires one of these representatives of the claimant, and not the claimant’s attorney, sign the lien. The lien must include the specific work or services performed, or material or equipment provided pursuant to the contract, and the claimant’s identity and contractual relationship with the owner or community association and the other known parties in the construction chain. Please contact Levy von Beck and Associates for form information. [2A:44A-6, 2A:44A-7, 2A:44A-8; Schor at §31.02[F][1] D.D.B. Interior Contracting Inc. v. Trends Urban Renewal Ass’n, Ltd., 821 A.2d 1135 (2003)] COPY GIVEN TO OWNER, CONTRACTOR, SUB, etc. MUST BE MARKED “RECEIVED FOR FILING,” OR A SIMILAR STAMP, WITH THE DATE AND TIME RECEIVED BY THE CLERK. [2A:44A-7]

NOTE that if you need to amend the lien, please contact Levy von Beck and Associates for form information. and you need to deliver and file it as you would the lien itself. Like the lien, it should be signed and verified by the claimant and not an attorney. [2A:44A-11]

Note that lien amount cannot exceed the unpaid portion of the claimant’s contract amount, and is ultimately limited to the lesser of the amount owed to the general, the sub, or the supplier at the time the copy of the lien is served. If the claimant is the general contractor or has a contract with the general contractor, then the lien is limited to the earned amount of the contract between the owner and the contractor less any payments made before the copy of the lien was served. If the claimant has a contract with a subcontractor who has a direct contract with the general contractor, then the claim is limited to the lesser of (a) the amount just stated, or (b) to the earned amount of the contract between the contractor and the contractor’s sub, less any payments made prior to service of the copy of the lien claim. [2A:44A-9]

NOTE ALSO that where a claimant applies payments to its customer’s oldest outstanding invoices, rather than to the project from which the funds originated, the claimant will be unable to file a lien. In that situation, the claimant is unable to state under oath that the project owner owes a particular debt, thus lien rights are lost. Craft v. Stevenson Lumber Yard, Inc., 843 A.2d 1076 (2004). A supplier has an affirmative duty to allocate payments correctly. Where the customer has not provided specific, reliable instructions as to the allocation of its payment, or when the circumstances are such that a reasonable supplier should suspect the customer has not used an owner’s funds to pay for materials for that owner, then the supplier must make further inquiry and attempt to ascertain the source of the payment so that it can correctly allocate them. The failure to do so sacrifices the supplier’s lien rights. [L & W Supply Corp. v. DeSilva, 57 A.3d 558 (N.J.Super.A.D.2012)]

NOTE that where the project is residential, and there is a contract between the lien claimant and the owner, or other writing signed by the parties, which provides for an allocation by lot or tract, or otherwise, that allocation of the proportionate share is binding on the lien claimant. Absent a contract between the lien claimant and the owner, or other writing signed by the parties, any allocation made must be proportionate to each lot if subdivision approval has been granted or to each tract if no subdivision approval is required or has been granted. If the project is a condominium or coop and a master deed is filed before the lien attaches, then the proportionate share must be allocated in an amount equal to the percentage of common elements attributable to each residential unit. [2A:44A-18]

CONTRACTOR’S BOND:

Statement of amount due. The statute does not specify who should sign this notice, and it is not verified, but it is probably safest to have the claimant sign it. [2A:44-145] It is advisable to obtain a copy of the bond itself, to ensure that the claimant complies with all notice requirements set out in the bond. [Schor at 31.01[D]]

CONTRACT FUNDS:

-Claimant’s name and address

-Amount claimed and from whom due (Note that if the preliminary notice it is given late, the lien amount will ultimately be limited to the amount owing to the claimant’s customer when the notice is given, and only labor or materials provided on or after the date the preliminary notice is filed will be covered. [2A:44-128] )

-If the amount is not yet due, state when it will be due

-Amount of demand, less credits and offsets

-Name of person to whom labor or materials were furnished and whether person is the contractor or sub

-Nature of the public work to which contract relates

-Name of general contractor and the name of the public agency with which contract was made

-That labor or materials were furnished to general or sub (as case may be) and that they were actually used in the execution or completion of contract with the public agency

-Claim must be verified by the claimant or the claimant’s agent. The case law does not address a verification by the claimant’s attorney, but from the statutory language it appears that would be acceptable. [2A:44-132, 2A:44-133]

Within 1 year of claimant’s last furnishing of labor, material, services or equipment, or within 30 days of receiving written notice (by personal service or certified mail, RRR) from the owner, community association, contractor or subcontractor against whose account the lien is filed, requiring claimant to start an action. Claimant must also file a Lis Pendens. [2A:44A-21, 2A:44A-24.1] Note that this deadline is not affected by the date when the Certificate of Occupancy is issued. [Daidone v. Buterick Bulkheading, 924 A.2d 1193
(N.J. 2007)] NOTE ALSO that if the claimant does not timely commence an action, and does not discharge the lien of record, the claimant will be liable for costs, attorneys’ fees, and possibly damages. [2A:44A-14]

CONTRACTOR’S BOND:

More than 90 days after giving final notice to surety and contractor, but less than 1 year after the claimant last performed work or delivered materials to the project. 2A:44-145, 2A:44A-146]

CONTRACT FUNDS:

Within 60 days after the whole work to be performed by the contractor is completed or accepted by resolution of the agency. If someone else files first, claimant can protect his or her claim by filing an answer in that action. [2A:44-138]