Understanding New Jersey Construction Liens: Essentials for Property Owners

All you New Jersey homeowners out there! Are you familiar at all with construction (or mechanic's) liens?

In short, a construction lien is a security interest in real property (for example, your home) on which construction work has taken place. Contractors, subcontractors, suppliers, etc. may file these liens when they are not properly paid for their work.

When filed in accordance with the relevant rules, construction liens stay with the property, regardless of who owns the property later down the line. Essentially, a construction lien prevents the property owner from selling the property or borrowing against it without resolving the underlying lien. The contractor, subcontractor, supplier, etc. filing the claim is basically attaching to the land as a means of getting paid.

For residential construction projects, a claimant must file the lien no more than 120 days from the date of the claimant's last work. See NJ Stat. § 2A:44A-6(a)(2). The claimant must file a "Notice of Unpaid Balance" within 60 days of the last day worked and arbitration must be initiated for permission to file the lien. The claimant must complete the process within the 120-day period noted above."

‘Did You Know?’ is run by Ariel A. Bivas, an associate at Aini & Associates PLLC and an attorney licensed to practice law in New Jersey and New York. Ariel’s practice areas include corporate, real estate, and financial transactions as well as commercial litigation.