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How to File a New Jersey Preliminary Notice

How to File a New Jersey Preliminary Notice

January 30, 2020

The preliminary notice is one of the most important lien-related documents that you must fully understand if you want to protect and exercise your lien rights. In most states, serving this document is required before you may file a valid mechanics lien.

New Jersey has complex preliminary notice requirements specifically for residential projects. For instance, the preliminary notice in New Jersey – also known as the Notice of Unpaid Balance and Right to Claim Lien – must be filed in the local county clerk’s office as well as served on every higher-tier party.

There are also other pre-lien requirements that you must complete in order to secure your lien rights in New Jersey. This step-by-step guide will walk you through the process of filing a valid New Jersey preliminary notice.

Who must file a preliminary notice in New Jersey?

All parties working on residential properties are required to file and serve a preliminary notice in New Jersey. This includes general contractors, subcontractors, and material suppliers.

Parties working on non-residential projects are not required to serve this preliminary notice. However, they are still encouraged to do so in order to have possible lien priority over mortgage and other claims.

When to file a New Jersey preliminary notice

The New Jersey Notice of Unpaid Balance and Right to Claim Lien has to be served within 60 days after your last day of work.

Also keep in mind that this deadline applies to all types of parties – general contractors, subcontractors, and material suppliers – as long as they are working on residential projects.

New Jersey preliminary notice non-residential projects

What happens if you fail to file a preliminary notice in New Jersey?

If you are working on a residential project, failing to file a valid New Jersey preliminary notice will result in the revocation of your lien rights. This means that you may not file a valid mechanics lien to recover payment from your client.

Parties working on non-residential projects are not required to serve the preliminary notice in New Jersey. Therefore, failing to serve a Notice of Unpaid Balance and Right to Claim Lien does not have any serious effect on their lien rights.

How to file a New Jersey preliminary notice

  1. Prepare the New Jersey preliminary notice form
  2. File the preliminary notice in the local county clerk’s office
  3. Serve the preliminary notice and other pertinent documents to the appropriate parties

1. Prepare the New Jersey preliminary notice form

The New Jersey preliminary notice form require many important details, including the following:

  • The name and business address of the claimant
  • The name of the property owner
  • The name of the party who hired the claimant
  • The physical address of the project
  • The date the claimant signed a contract with the party that hired them
  • A list of services, materials, or equipment provided by the claimant to the project
  • The initial contract price
  • The total contract price
  • The amount paid to the claimant
  • The total lien claim amount

The Notice of Unpaid Balance and Right to Claim Lien in New Jersey must be in the following form:

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:

(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: __________).

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 ($ __________).

In accordance with the above contract, this claimant performed the following work or provided the following services, material or equipment:
_______________
_______________
_______________ etc.
The date of the provision of the last work, services, material or equipment for which payment is claimed is (date.)

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:

Initial Contract Price: $ _______________
Executed Amendments to Contract Price/Change Orders: $_______________
Total Contract Price (A + B) = $_______________
If Contract Not Completed, Value Determined in Accordance with Contract of Work Completed or Services, Material or Equipment Provided :__________
Total from C or D (whichever is applicable): $ _______________
Agreed upon Credits: $ _______________
Amount Paid to Date: $ _______________

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

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).

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:

I have authority to file this Notice of Unpaid Balance and Right to File Lien.

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.

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.

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.

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

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.

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.).

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.

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.

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.

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.

Note that the New Jersey preliminary notice must include all the relevant statements as written above. Failing to use the prescribed form may result in the invalidation of your preliminary notice, which could be fatal to your lien claim.

2. Record the preliminary notice in the local county clerk’s office

The preliminary notice in New Jersey must be recorded in the clerk’s office in the county where the project is located.

Keep in mind that you have 60 days after your last day of work to file your New Jersey preliminary notice. Also note that filing the notice comes with recording fees. You may call your county clerk’s office to know that exact fees that you need to pay.

Also remember that even though you are required to file the preliminary notice in the recorder’s office, your Notice of Unpaid Balance and Right to File Lien is not the same as an actual mechanics lien. You will still have to file a separate New Jersey mechanics lien if you want to recover your payment through this method.

3. Serve the preliminary notice and other pertinent documents on the appropriate parties

After filing the preliminary notice, you have to serve a copy of the recorded notice on all higher-tier parties – this may include the party that hired you, the general contractor, and the property owner. Service of this notice must be done via certified mail with return receipt requested AND by regular mail.

Remember that you have to serve the preliminary notice using both methods in order for it to be considered valid.

Aside from the preliminary notice, you also have to serve on the higher-tier parties other important documents, including the demand for arbitration. Submitting a demand for arbitration to the American Arbitration Association (AAA) is a separate requirement in New Jersey in order to secure full protection of your lien rights.

Best practices when filing a New Jersey preliminary notice

1. File and serve the preliminary notice on time

Failing to record and serve the preliminary notice in New Jersey may cost you your lien rights, so it is best practice to prepare the form early and have it recorded way before the 60-day deadline elapses.

The New Jersey preliminary notice form might take some time to prepare as it requires specific details concerning your contract and the amounts in question. Preparing in advance will help you ensure that all the details you are including are accurate and will give you time to double-check the required information.

2. File the preliminary notice even if not required

While the New Jersey preliminary notice is not required for parties working on non-residential projects, filing this notice can get you lien priority over mortgage and other types of claims. You just have to file your preliminary notice before the permanent funding is recorded.

Taking the time to prepare your New Jersey preliminary notice, even if not required, may be beneficial if payment disputes arise, so it is still a good business practice to record one.

New jersey preliminary notice

3. Do not forget to complete other lien-related requirements

Filing the Notice of Unpaid Balance and Right to Claim Lien is not the only required step if you want to file a valid mechanics lien on a residential property in New Jersey. You also have to submit a demand for arbitration to the AAA, and their decision may take up to 30 days to arrive.

Submitting your arbitration demand to the AAA includes sending them a copy of your recorded preliminary notice, which is another reason why you must prepare and record your New Jersey preliminary notice early.

Also be aware that the preliminary notice is not the same as a New Jersey mechanics lien. You will have to record a separate document to have a mechanics lien officially recorded against a property.

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