Construction Frequently
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Preliminary Notice FAQ

A New Jersey preliminary notice, called notice of unpaid balance and right to claim lien, is a letter sent by a contractor or supplier to the property owner at the start of a construction project. In many states, a preliminary notice is required in securing the right to lien.

For residential projects, a New Jersey notice of unpaid balance and right to claim lien is due within 60 days after last providing materials or labor. It should be filed with the county clerk. 

 

This notice must also come with a demand for arbitration, served on the property owner with the American Arbitration Association. The arbitration demand must be served within 10 days after the notice is recorded. 

 

For non-residential projects, it is not required. However, it is still a good idea to send this notice because it has the effect of prioritizing a potential lien claimant.

If a project is residential, the claimant may have his or her mechanics lien invalidated when a New Jersey notice of unpaid balance and right to claim lien is not filed. 

 

If a project is non-residential, there is no harm in not sending this notice.

Intent To File FAQ

A New Jersey notice of intent to lien is sent before the filing of a mechanics lien becomes necessary. Although only a number of states require that this notice be sent, many construction participants send a notice of intent to lien as an uncostly way to have payments for invoices settled.

No, you are not required to send a New Jersey notice of intent to lien. However, as a potential lien claimant, you will do well to send one as it lets the recipient know that you are serious about the claim.

You may send a New Jersey notice of intent to lien at least 10 days before filing a mechanics lien.

Send your New Jersey notice of intent to lien to the party who owes you money.

Not sending a New Jersey notice of intent to lien will have no bearing on your claim since this notice is not required.

Mechanics Lien FAQ

A New Jersey mechanics lien is an effective tool that can help make sure you will be paid for the construction materials and/or labor you supplied. It is a legal claim that guarantees payment for contractors and suppliers.

 

This means that if you have a valid mechanics lien on a project you worked on in New Jersey, you have the right to enforce the lien through a lawsuit. This enforcement action can either prompt the client to settle or force the sale of the property. The proceeds of the sale will be used to settle your unpaid bill.

If you successfully file a New Jersey mechanics lien, you have an interest in the improved property. When a mechanics lien is filed on the property you worked on, the property becomes collateral for uncollected payments.

General contractors, subcontractors, laborers, suppliers of materials and equipment, engineers, architects, surveyors, and construction managers are covered by mechanics lien rights in New Jersey.¹

 

In addition to the abovementioned, suppliers to suppliers can file a mechanics lien too. However, this is allowed only within the first 3 tiers. This means a supplier to a supplier who contracted with a party that is not the property owner is not covered by lien rights. A sub-sub-subcontractor, a supplier to a sub-sub, or a supplier to a supplier of a sub does not have lien rights in New Jersey.

For residential projects in New Jersey, a mechanics lien must be filed within 120 days after the claimant last supplied materials or labor and not later than 10 days after the claimant’s receipt of the arbitrator’s determination.²

 

For non-residential projects, a mechanics lien must be filed within 90 days after the claimant last provided materials or labor and served on the property owner within 10 days after filing.

A claimant has one year to enforce a mechanics lien after the date of last furnishing materials or labor. This period is reduced to 30 days following receipt of a written notice from the property owner to enforce the lien. The lien expires if no action is taken within either of these periods.³

New Jersey requires the following pieces of information to appear on the mechanics lien form: 

  • The name, business and address of the claimant
  • The name of the owner or reputed owner of the property
  • A description of the property for identification
  • A statement of the amount of the lien
  • The name of the community association and the name and location of the project
  • A statement of which party’s interest the lien is being claimed against
  • The date of the written contract
  • The capacity and address of the party the claimant contracted with
  • A description of the materials or labor delivered
  • The date of last providing the materials or labor
  • The amount due for labor, material or equipment furnished by claimant for the improvement of the property that the mechanics lien is based on. The formula is as follows:

Initial Contract Price: $ _______________

Executed Amendments to Contract Price/Change Orders: $__________________

Total Contract Price (A + B) = $_________________

If Contract Not Completed, Value Determined in Accordance with the Contract of Work Completed or Services, Material,  Equipment Provided: _________

Total from C or D (whichever is applicable): $___________

Agreed upon Credits: $ ________________

Amount Paid to Date: $ ________________

TOTAL LIEN CLAIM AMOUNT E – [F + G] = $___________

You don’t need a license for the work you did on a project to file a mechanics lien in New Jersey.

You can use any lien waiver form since New Jersey does not have statutory lien waiver forms. 

 

Furthermore, New Jersey state law disallows contractors and suppliers from waving their lien rights.⁴

A lien release in New Jersey is due within 30 days after the lien has been satisfied. A certificate of discharge must bear certain statutory requirements, namely:

  • book and page of recording the claim
  • the name of the owner
  • the filing date
  • the property’s location 
  • the hiring party

If a lien release is not filed within the time allowed, the lien claimant will be liable to attorney fees, court costs and other damages.

In New Jersey, no published state court decision determines when a clause in contract is a pay when paid one or a pay if paid one. 

 

The way to distinguish between the former and the latter is to see whether a clause is absolutely clear that the risk of nonpayment is shifted, from the property owner to the primary contractor, for instance

References:

law.justia.com

New Jersey Mechanics Lien Statute

¹ New Jersey Revised Statutes Section 2A: 44A-3

² New Jersey Revised Statutes Section 2A: 44A-6 

³ New Jersey Revised Statutes Section 2A: 44A-14 

New Jersey Revised Statutes Section 2A: 44A-38

Handle.com provides answers to Frequently Asked Questions (FAQs) to contractors and others who are seeking information regarding preliminary notices, intent to file, mechanics lien, and other construction questions. These are provided for informational purposes only, and we cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies.