The Construction Lien Law N.J.S.A. 2A:44A-1 et seq., (“the Construction Lien Law”) affords contractors, subcontractors, laborers and materialman the opportunity to protect themselves and improve the chances that they will receive payment for labor and materials supplied at a construction project. At the same time, the law also protects owners from paying more for labor and materials supplied at a construction project. The Construction Lien Law allows a claimant to create a lien so that payment to the claimant for its outstanding bill is protected while simultaneously ensuring that an owner does not have to pay both a general contractor, subcontractor, laborer or materialman for the same labor and materials.
The Construction Lien Law applies to private construction projects. It is not applicable to public works projects or improvements to real property owned by a public entity. The lien that may be created under the Construction Lien Law attaches to the interest of the owner in the real property that is being improved on the date that the lien claim is filed and is equal to the value of the work, services, materials, or equipment furnished at the site for which the claimant has not been paid. Thus, if the claimant has not been paid and follows the steps required to create a lien, the claimant can obtain a lien on the property that secures the claim for monies owed. This remedy is a powerful tool in obtaining payment of outstanding balances.
A prerequisite to obtaining a lien is a signed contract or purchase order. If the general contractor, subcontractor, laborer, or materialman does not have a signed document it cannot obtain a lien. In order for the lien to properly attach, the claimant must strictly adhere to the filing and notice requirements that are contained in the Construction Lien Law.
Additional steps must be followed to create a construction lien when dealing with residential construction projects. The law provides more protection for the homeowner whose property is subject to the lien because of the unique nature of residential construction. The additional steps that must be followed ensure that there will be an expeditious determination as to whether the lien is appropriately filed.
Use of the Construction Lien Law will help you get paid for the labor and materials that you supply at a construction site. You should use the Law as a standard operating procedure to increase collection of your accounts receivable.
Michael M. DiCicco, a partner at Bathgate, Wegener & Wolf who specializes in construction litigation and representation of owners, contractors, subcontractors, laborers and materialman in construction projects, is available to answer questions that you have regarding construction law.
Bathgate, Wegener & Wolf