How to File a New Jersey Mechanics Lien | Handle

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How to File a New Jersey Mechanics Lien

How to File a New Jersey Mechanics Lien

February 11, 2020

Filing a mechanics lien is very effective in securing payment from clients who are unable to honor their end of the deal. This is because most property owners would rather settle outstanding payments to construction parties instead of dealing with a mechanics lien.

Once a mechanics lien is filed, it gets attached to a property’s public records so financiers and buyers could see the outstanding debts related to the property. A mechanics lien, therefore, limits a property’s market value, so it gives you leverage when demanding payment from a delinquent client.

Recording a mechanics lien is, however, a rather tedious process. In New Jersey, rules differ depending on the type of project that you are working on. This guide details all the steps in filing a mechanics lien in New Jersey, from protecting your lien rights to the best practices you must keep in mind.

Who can file a mechanics lien in New Jersey?

General contractors, subcontractors, and material suppliers all have the right to file a mechanics lien in New Jersey. Typically all parties up to the third tier of the contracting chain have lien rights. These parties include sub-subcontractors and suppliers to a direct supplier of the property owner.

Lower-tier parties such as sub-sub-subcontractors and suppliers to sub-subcontractors are, unfortunately, not allowed by law to file a mechanics lien.

Preliminary notice in New Jersey

Construction parties who are working on residential properties are required to file and serve a preliminary notice in New Jersey. This preliminary notice is also known as the Notice of Unpaid Balance and Right to Claim Lien.

Note that this notice must be filed in the local county clerk’s office before serving a copy on the property owners, general contractors, and other parties above you in the contracting chain. This preliminary notice must be filed and served within 60 days of your last day of work.

What information must be written in a New Jersey preliminary notice?

The following information must be included on your New Jersey preliminary notice form:

  • Name and business address of the claimant
  • Name of the property owner
  • Name of the party who hired the claimant
  • Physical address of the project’s location
  • Date the claimant signed a contract with the party that hired them
  • List of services, materials, or equipment provided by the claimant to the project
  • Initial contract price
  • Total contract price
  • Amount paid to the claimant
  • Total lien claim amount

Your preliminary notice must also substantially use the following format:

TO THE CLERK, COUNTY OF __________:
NOTICE OF UNPAID BALANCE AND RIGHT TO FILE LIEN

In accordance with the “Construction Lien Law,” P.L.1993, c. 318 (C.2A:44A-1 et al.), notice is hereby given that:

1. (Name of claimant), individually or as a partner of the claimant known as (Name of partnership), or an officer/member of the claimant known as (Name of corporation or LLC) (Please circle one and fill in name as applicable) located at (Business address of claimant) has on (date) a potential construction lien against the real property of (name of owner of property subject to lien), in that certain tract or parcel of land and premises described as Block __________, Lot __________, on the tax map of the (municipality) of __________, County of __________, State of New Jersey, in the amount of ($__________ ), as calculated below for the value of the work, services, material or equipment provided. (If claim is against a community association in accordance with section 3 of P.L.1993, c. 318 (C.2A:44A-3), set forth the name of the community association and the name and location of the property development.) The lien is to be claimed against the interest of the owner, unit owner, or other party, or against the community association(circle one; if “other”, describe: __________).

2. The work, services, material or equipment was provided pursuant to the terms of a written contract (or, in the case of a supplier, a delivery or order slip signed by the owner, community association, contractor, or subcontractor having a direct contractual relation with a contractor, or an authorized agent of any of them), dated __________, between (claimant) and owner, unit owner, community association, contractor or subcontractor (circle one), named or known as(name of contracting party) and located at (address of other contracting party), in the total contract amount of ($ _____) together with (if applicable) amendments to the total contract amount aggregating ($ __________).

3. In accordance with the above contract, this claimant performed the following work or provided the following services, material or equipment:
a. _______________
b. _______________
c. _______________ etc.

4. The date of the provision of the last work, services, material or equipment for which payment is claimed is (date.)

5. The amount due for work, services, material or equipment provided by claimant in connection with the improvement of the real property, and upon which this lien claim is based is calculated as follows:A. Initial Contract Price: $ _______________
B. Executed Amendments to Contract Price/Change Orders: $_______________
C. Total Contract Price (A + B) = $_______________
D. If Contract Not Completed, Value Determined in Accordance with Contract of Work Completed or Services, Material or Equipment Provided :__________
E. Total from C or D (whichever is applicable): $ _______________
F. Agreed upon Credits: $ _______________
G. Amount Paid to Date: $ _______________
TOTAL LIEN CLAIM AMOUNT E – [F + G] = $_______________

6. The written contract (is) (is not) (cross out inapplicable portion) a residential construction contract as defined in section 2 of P.L.1993, c. 318 (C.2A:44A-2).

7. This notification has been lodged for record prior or subsequent to completion of the work, services, material or equipment as described above. The purpose of this notification is to advise the owner or community association and any other person who is attempting to encumber or take transfer of said property described above that a potential construction lien may be lodged for record within the 90-day period, or in the case of a residential construction contract within the 120-day period, following the date of the provision of the last work, services, material or equipment as set forth in paragraph 4 of this notice.

CLAIMANT’S REPRESENTATION AND VERIFICATION

Claimant represents and verifies that:
1. I have authority to file this Notice of Unpaid Balance and Right to File Lien.
2. The claimant is entitled to the amount claimed herein at the date this Notice is lodged for record, pursuant to claimant’s contract described in the Notice of Unpaid Balance and Right to File Lien.
3. The work, services, material or equipment for which this Notice of Unpaid Balance and Right to File Lien is filed was provided exclusively in connection with the improvement of the real property which is the subject of this Notice of Unpaid Balance and Right to File Lien.
4. The Notice of Unpaid Balance and Right to File Lien has been lodged for record within 90 days, or in the case of a residential construction contract within 60 days, from the last date upon which the work, services, material or equipment for which payment is claimed was provided.
5. The foregoing statements made by me are true, to the best of my knowledge.
Name of Claimant
_____________________________________________________________
Signed
_____________________________________________________________
(Type or Print Name and Title)
SUGGESTED NOTARIAL FOR INDIVIDUAL CLAIMANT:
STATE OF NEW JERSEY
COUNTY OF ____________________ ss:
On this _____ day of _____ 20_____, before me, the subscriber, personally appeared (person signing on behalf of claimant(s)) who, I am satisfied, is/are the person(s) named in and who executed the within instrument, and thereupon acknowledged that claimant(s) signed, sealed and delivered the same as claimant’s (s’) act and deed, for the purposes therein expressed.
____________________
NOTARY PUBLIC
SUGGESTED NOTARIAL FOR CORPORATE OR LIMITED LIABILITY CLAIMANT:
STATE OF NEW JERSEY
COUNTY OF ____________________ ss:
On this _____ day of _____ 20___, before me, the subscriber, personally appeared (person signing on behalf of claimant(s)) who, I am satisfied is the Secretary (or other officer/manager/agent) of the Corporation (partnership or limited liability company) named herein and who by me duly sworn/affirmed, asserted authority to act on behalf of the Corporation (partnership or limited liability company) and who, by virtue of its Bylaws, or Resolution of its Board of Directors (or partnership or operating agreement) executed the within instrument on its behalf, and thereupon acknowledged that claimant signed, sealed and delivered same as claimant’s act and deed, for the purposes herein expressed.
____________________
NOTARY PUBLIC
c. A claimant electing to file a Notice of Unpaid Balance and Right to File Lien as described above need not serve a copy upon any interested party.
d. After the filing of a Notice of Unpaid Balance and Right to File Lien, any person claiming title to or an interest in or a lien upon the real property described in the Notice of Unpaid Balance and Right to File Lien, shall be deemed to have acquired said title, interest or lien with knowledge of the anticipated filing of a lien claim, and shall be subject to the terms, conditions and provisions of that lien claim within the period provided by section 6 of P.L.1993, c. 318 (C.2A:44A-6) and as set forth in the Notice of Unpaid Balance and Right to File Lien. A Notice of Unpaid Balance and Right to File Lien filed under this act shall be subject to the effect of a Notice of Settlement filed pursuant to P.L. 1979, c. 406 (C.46:16A-1 et seq.).
e. The Notice of Unpaid Balance and Right to File Lien shall be effective for 90 days or in the case of a residential construction contract claim for 120 days from the date of the provision of the last work, services, material or equipment delivery for which payment is claimed as set forth in paragraph 4 of the Notice of Unpaid Balance and Right to File Lien.
f. The lodging for record or filing of a Notice of Unpaid Balance and Right to File Lien shall not constitute the lodging for record or filing of a lien claim nor does it extend the time for the lodging for record of a lien claim, in accordance with this act.
g. Failure to file a Notice of Unpaid Balance and Right to File Lien shall not affect the claimant’s lien rights arising under this act, to the extent that no conveyance, lease or mortgage of an interest in real property occurs prior to the filing of a Notice of Unpaid Balance and Right to File Lien or lien claim.
h. A Notice of Unpaid Balance and Right to File Lien may be amended by the filing of an Amended Notice of Unpaid Balance and Right to File Lien in accordance with this section.

How to serve the New Jersey preliminary notice on higher-tier parties

The Notice of Unpaid Balance and Right to Claim Lien must be served via certified mail with return receipt requested AND by regular mail. Note that both these methods must be used when serving the notice.

Also remember that the recorded preliminary notice must be served on the property owner, the general contractor, and all other parties above you in the contracting chain.

What happens if you fail to serve a preliminary notice when working on a residential project?

Failing to file a valid New Jersey preliminary notice on time is fatal to your lien rights if you are working on a residential project. For all other types of projects, filing a preliminary notice is not mandatory and will, therefore, not affect your right to file a mechanics lien.

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How to file a New Jersey mechanics lien

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1. Submit an arbitration demand (for residential projects)
2. Prepare your mechanics lien form
3. Record your mechanics lien in the local county clerk’s office
4. Serve a copy of the mechanics lien on all higher tier parties
5. Enforce/Release the mechanics lien

1. Submit an arbitration demand (for residential projects)

Parties working on residential properties must first submit an arbitration demand to the American Arbitration Association (AAC) before they can file a mechanics lien. When you submit a demand for arbitration, you let the AAC decide whether you have a valid mechanics lien claim. Only when you receive the arbitration award must you formally record a mechanics lien against a property.

Note, however, that the AAC can take about 30 days to decide on your demand for arbitration. You must consider this when deciding when to submit your arbitration demand. The deadline for recording the mechanics lien will not be extended based on when you receive the arbitrator’s decision.

2. Prepare your mechanics lien form

The demand for arbitration for residential projects will include most of the important details that are also part of a mechanics lien. If you are working on a non-residential project, you may proceed to this step and prepare your New Jersey mechanics lien form.

The following pieces of information must be on your New Jersey mechanics lien form:

  • Name and business address of the claimant
  • Name of the property owner
  • Name of the party who hired the claimant
  • Physical address of the project’s location
  • Date the claimant signed a contract with the party that hired them
  • List of services, materials, or equipment provided by the claimant to the project
  • Initial contract price
  • Total contract price
  • Amount paid to the claimant
  • Total lien claim amount

The New Jersey mechanics lien form must also follow this format:

CONSTRUCTION LIEN CLAIM TO THE CLERK, COUNTY OF __________: In accordance with the “Construction Lien Law,” P.L.1993, c. 318 (C.2A:44A-1 et al.), notice is hereby given that (only complete those sections that apply): 1. On (date), I, (name of claimant), individually, or as a partner of the claimant known as (name of partnership), or an officer/member of the claimant known as (name of corporation or LLC) (circle one and fill in name as applicable), located at (business address of claimant), claim a construction lien against the real property of (name of owner of property subject to lien), in that certain tract or parcel of land and premises described as Block _____, Lot _____, on the tax map of the (municipality) of _____, County of_____, State of New Jersey, (or if no Block and Lot is assigned, a metes and bounds or other description of the property) in the amount of $(lien claim amount), as calculated below for the value of the work, services, material or equipment provided. (If the claim is against a community association in accordance with section 3 of P.L.1993, c. 318 (C.2A:44A-3) set forth the name of the community association and the name and location of the property development.) The lien is claimed against the interest of the owner, unit owner, or against the community association in accordance with section 3 of P.L.1993, c. 318 (C.2A:44A-3) or other party (circle one; if “other”, describe: ____________________). 2. In accordance with a written contract for improvement of the above property, dated_______, with the property owner, community association, contractor, or subcontractor (circle one), named or known as (name of appropriate party), and located at (address of owner, unit owner, community association, contractor or subcontractor), this claimant performed the following work or provided the following services, material or equipment: a. ____________________ b. ____________________ c. ___________etc. 3. The date of the provision of the last work, services, material or equipment for which payment is claimed is _______, 20___. 4. The amount due for work, services, material or equipment delivery provided by claimant in connection with the improvement of the real property, and upon which this lien claim is based, is calculated as follows: A. Initial Contract Price: $ _______________ B. Executed Amendments to Contract Price/Change Orders: $__________________ C. Total Contract Price (A + B) = $__________________ D. If Contract Not Completed, Value Determined in Accordance with the Contract of Work Completed or Services, Material, Equipment Provided: _________ E. Total from C or D (whichever is applicable): $ _______________ F. Agreed upon Credits: $ _______________ G. Amount Paid to Date: $ _______________ TOTAL LIEN CLAIM AMOUNT E – [F + G] = $ _______________ NOTICE OF UNPAID BALANCE AND ARBITRATION AWARD This claim (check one) does_______________does not_______________arise from a Residential Construction Contract. If it does, complete 5 and 6 below; if not residential, complete 5 below, only if applicable. If not residential and 5 is not applicable, skip to Claimant’s Representation and Verification. 5. A Notice of Unpaid Balance and Right to File Lien (if any) was previously filed with the County Clerk of __________ County on__________, 20___ as No.________, in Book ________ and Page ________. 6. An award of the arbitrator (if residential) was issued on __________ in the amount of $__________. CLAIMANT’S REPRESENTATION AND VERIFICATION Claimant represents and verifies under oath that: 1. I have authority to file this claim. 2. The claimant is entitled to the amount claimed at the date of lodging for record of the claim, pursuant to claimant’s contract described above. 3. The work, services, material or equipment for which this lien claim is filed was provided exclusively in connection with the improvement of the real property which is the subject of this claim. 4. This claim form has been lodged for record with the County Clerk where the property is located within 90 or, if residential construction, 120 days from the last date upon which the work, services, material or equipment for which payment is claimed was provided. 5. This claim form has been completed in its entirety to the best of my ability and I understand that if I do not complete this form in its entirety, the form may be deemed invalid by a court of law. 6. This claim form will be served as required by statute upon the owner or community association, and upon the contractor or subcontractor against whom this claim has been asserted, if any. 7. The foregoing statements made by me in this claim form are true, to the best of my knowledge. I am aware that if any of the foregoing statements made by me in this claim form are willfully false, this construction lien claim will be void and that I will be liable for damages to the owner or any other person injured as a consequence of the filing of this lien claim.

Name of Claimant____________________Signed_________________________(Type or Print Name and Title)

SUGGESTED NOTARIAL FOR INDIVIDUAL CLAIMANT:
STATE OF NEW JERSEY
COUNTY OF [……….] ………. ss:
On this _____ day of _____ 20___, before me, the subscriber, personally appeared [person signing on behalf of claimant(s)] who, I am satisfied, is/are the person(s) named in and who executed the within instrument, and thereupon acknowledged that claimant(s) signed, sealed and delivered the same as claimant’s (s’) act and deed, for the purposes therein expressed.
_________________________
NOTARY PUBLIC
SUGGESTED NOTARIAL FOR CORPORATE OR LIMITED LIABILITY CLAIMANT:
STATE OF NEW JERSEY
COUNTY OF [……….] ………. ss:

On this _____ day of _____ 20___, before me, the subscriber, personally appeared [person signing on behalf of claimant(s)] who, I am satisfied is the Secretary [or other officer/manager/agent] of the Corporation [partnership or limited liability company] named herein and who by me duly sworn/affirmed, asserted authority to act on behalf of the Corporation [partnership or limited liability company] and who, by virtue of its Bylaws, or Resolution of its Board of Directors [or partnership or operating agreement] executed the within instrument on its behalf, and thereupon acknowledged that claimant signed, sealed and delivered same as claimant’s act and deed, for the purposes herein expressed.
_________________________
NOTARY PUBLIC
NOTICE TO OWNER OF REAL PROPERTY
NOTICE TO CONTRACTOR OR SUBCONTRACTOR, IF APPLICABLE

The owner’s real estate may be subject to sale to satisfy the amount asserted by this claim. However, the owner’s real estate cannot be sold until the facts and issues which form the basis of this claim are decided in a legal proceeding before a court of law. The lien claimant is required by law to commence suit to enforce this claim.

The claimant filing this lien claim shall forfeit all rights to enforce the lien claim and shall be required to discharge the lien claim of record, if the claimant fails to bring an action in the Superior Court, in the county in which the real property is situated, to establish the lien claim:

1. Within one year of the date of the last provision of work, services, material or equipment, payment for which the lien claim was filed; or

2. Within 30 days following receipt of written notice, by personal service or certified mail, return receipt requested, from the owner or community association, contractor, or subcontractor against whom a lien claim is filed, as appropriate, requiring the claimant to commence an action to establish the lien claim.

You will be given proper notice of the proceeding and an opportunity to challenge this claim and set forth your position. If, after the owner (and/or contractor or subcontractor) has had the opportunity to challenge this lien claim, the court of law enters a judgment against any of you and in favor of the claimant filing this lien claim, and thereafter judgment is not paid, the owner’s real estate may then be sold to satisfy the judgment. A judgment against a community association for a claim of work, services, material or equipment pursuant to a contract with that community association cannot be enforced by a sale of real estate.

The owner may choose to avoid subjecting the real estate to sale by the owner (or contractor) by either:

1. paying the claimant and obtaining a discharge of lien claim from the claimant, by which the owner will lose the right to challenge this lien claim in a legal proceeding before a court of law; or

2. causing the lien claim to be discharged by filing a surety bond or making a deposit of funds as provided for in section 31 of P.L.1993, c. 318 (C.2A:44A-31), by which the owner will retain the right to challenge this lien claim in a legal proceeding before a court of law.

Note that your mechanics lien form must include all the statements and important information as prescribed in the form above. Failing to adhere to this prescribed format may result in the invalidation of your mechanics lien.

Also, note that the New Jersey mechanics lien must be notarized. You must, therefore, sign your document while in the presence of an authorized notary officer.

3. Record your mechanics lien in the local county clerk’s office

You must file your mechanics lien in the local county clerk’s office where the project is located. Note that there are two different deadlines for filing a mechanics lien:

New Jersey certificate of discharge

Notice that parties working on residential properties are given more time to file a mechanics lien. This is because they are also required to first file and serve a preliminary notice – the Notice of Unpaid Balance and Right to Claim Lien – and they must also first secure an arbitration award before they can record a mechanics lien.

Also remember that recording a mechanics lien comes with recording fees. It is recommended that you first contact the local county clerk’s office to know how much it will cost you to record a mechanics lien.
You may record your mechanics lien in person or by mail. Recording the mechanics lien by mail implies that it must come with the exact amount of the recording fees, so make sure that you know how much you are expected to pay.

4. Serve a copy of the mechanics lien on all higher-tier parties

Once your mechanics lien has been recorded, you must serve a copy of it on the property owner and other higher-tier parties. These higher-tier parties may include the general contractor and the party who hired you. The deadline for serving the copy of the mechanics lien is within 10 days of the recordation date.

Serving copies of the mechanics lien must be done using two methods: via certified mail with return receipt requested and via regular mail. Keep in mind that these two methods must be fulfilled – the state laws require you to serve the copies of the mechanics lien using BOTH methods.

5. Enforce or release the mechanics lien

Two things can happen after you file a mechanics lien: either you get paid or you don’t.

If you do get paid and the lien has been satisfied, you are required by law to release the mechanics lien by filing a Certificate of Discharge in the same county clerk’s office where there original mechanics lien was filed. You have 30 days after getting paid to file this certificate.

Failing to release a lien within the 30-day period may result in some penalties and fines. You may have to shoulder the property owners’ attorney fees and other lien-related expenses if you do not file a Certificate of Discharge on time.

If, on the other hand, you do not receive your payment after filing a mechanics lien, the next course of action is to enforce the lien by initiating a foreclosure lawsuit. This is a full-blown legal action to foreclose a property which will allow you to recover payment from the property’s potential foreclosure sale.

A mechanics lien in New Jersey is only effective for 1 year after the recordation date, so you must enforce a mechanics lien before this 1-year window closes. You may also send a Notice of Intent to Foreclose to the property owner to let them know that you are about to file foreclosure lawsuit – this step is not a requirement but it could prompt the property owners to settle the outstanding payment.

If a property owner serves you a Notice to Commence Action after you filed the mechanics lien, your deadline to initiate the lawsuit is shortened to 30 days after receiving the notice. This means that a property owner believes that they can challenge your claim, so you must now be prepared to enforce your mechanics lien claim in the court.

Important deadlines to remember

New Jersey mechanics lien important deadlines

Best practices when filing a mechanics lien in New Jersey

1. Serve the Notice of Unpaid Balance and demand for arbitration early

For parties working on residential projects, filing a mechanics lien requires more steps. You must serve a preliminary notice and also secure an award from the arbitrator’s office. When a payment dispute arises, you are well-advised to immediately start the gears running and work on fulfilling these two requirements.

Note that you have 120 days after your last day of work to file a mechanics lien. Before this 120-day period elapses, you must have served the preliminary notice and secured the award from the arbitrator.
Arbitration decision typically takes about 30 days – your mechanics lien deadline will not be extended if the decision does not arrive on time, so make sure that you do all those steps as soon as you believe you have a valid lien claim.

2. Serve the copies of the mechanics lien on the same day of its recording

Serving copies of the mechanics lien is ideally to be done on the same day that you file it in the recorder’s office. This is for you to avoid complications and further questions regarding your compliance with New Jersey’s mechanics lien process.

Technically you have 10 days after the recordation date to serve copies of the mechanics lien, but it is always a good idea to get this requirement out of the way and do both the filing and serving the copies on the same day.

3. Ensure that you are using the correct New Jersey mechanics lien form

New Jersey has a prescribed mechanics lien form in its state laws. You must use this form and fill it out with the required information if you want your mechanics lien to be considered valid.

Failing to follow the prescribed form or using a substantially different mechanics lien form will invalidate your mechanics lien claim. New Jersey’s mechanics lien form has all the information that you need to prepare, so all you have to do is make sure that you include all the required details.

It is also a good idea to double-check the information that you include for typo errors and spelling mistakes. Sometimes small errors like failing to include the full business name of your company (e.g. not including the correct suffix such as Ltd. or Inc.) may be fatal to your lien claim.

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