What Are Residential Construction Liens?
In NJ, a residential construction lien is a claim against an owner’s interest in real property, i.e. your house and the property where it is located. Are you a homeowner? Has a contractor filed a lien against your real property? Here is what you need to know.
The NJ Construction Lien Law is a specific form of consumer protection pertaining to home improvement contracts. One of the most important protections it affords you is that it provides you with defensive measures should an invalid construction lien be filed against your real property. After all, a lien can interfere with bank loans, title ownership and even scare off potential contractors. What you need to be able to do is recognize when a contractor has filed an improper lien. The best way to do that would be to recognize the proper way to file a lien.
STEP ONE: The “NUB”
“NUB” stands for Notice of Unpaid Balance and Right to File Lien. The NUB is not a lien, but is an express condition precedent to the filing of a construction lien. The NUB must be filed by the contractor in the Office of the County Clerk, where the real property is located and must be served on you within 60 days of the last day that work, services or material was provided. If this is not done, then the later filed lien is improper.
STEP TWO: Arbitration
Within 10 days of serving the NUB, the contractor must deal with AAA by filing a demand for arbitration. No, we are not referring to roadside service. In this case, AAA is the American Arbitration Association, unless the parties have otherwise agreed in the construction contract to an alternative dispute mechanism. You must also be notified of the demand for arbitration. Within 30 days of the demand for arbitration, an arbitrator will determine the validity and the amount of the lien.
STEP THREE: Beyond The Acronyms
If and you are past the “NUB” and AAA, then and only then can a contractor place a construction lien on your residential property. While the “NUB” had to be filed within 60 days of the last day that work, service or material was delivered, the construction lien must be filed within 90 days of that date. The important thing to know is that if everything is done properly, this is when the contractor can commence an action to start a lien claim in the Superior Court of New Jersey in the county in which the property is situated. The lien lawsuit must be filed within 1 year of the date of the last provision of work, services, material or equipment, payment for which the lien claim was filed or within 30 days of when the property owner demands by written notice, served by certified mail, return receipt, that the action be commenced.
It behooves contractors and homeowners to know the construction lien process. If a construction lien is improper or without basis, the contractor is liable for the homeowner’s court costs including reasonable attorney fees.
If you have any questions regarding construction law and litigation, contact the Law Office of H. Benjamin Sharlin LLC for a free consultation.
Please be advised that this blog is for informational purposes only, is not legal advice and does not create an attorney-client relationship.
The Law Office of H. Benjamin Sharlin LLC
is owned and operated by H. Benjamin Sharlin and serves all of Mercer County, New Jersey and the surrounding areas. Mr. Sharlin is a bilingual Spanish-speaking attorney who vigorously represents the interests of all his clients.
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