Construction Liens · New Jersey
Using, and Answering, a Construction Lien Under New Jersey Law
A construction lien can be the strongest payment tool a contractor has, but New Jersey's statute is technical and its deadlines are unforgiving. The firm evaluates whether a lien is available, preserves it correctly, and helps owners and contractors respond when one is filed against them.
The basics
What a construction lien is, and what it is not
The New Jersey Construction Lien Law (N.J.S.A. 2A:44A-1 et seq.) lets certain contractors, subcontractors and suppliers who improved real property file a claim against the owner's interest in that property for amounts due and unpaid.
A lien does not create a new right to be paid; it secures a debt that already exists under a contract. Its value is leverage: a recorded lien clouds title, which matters to an owner who wants to sell, refinance or close out a construction loan. That leverage is also why the statute imposes strict conditions on who may file, for how much and by when.
The amount a lien can secure is limited by the statute, and the owner's exposure is generally tied to what it still owes under its own contract. Lien rights also reach only so far down the contracting chain. Before filing, it is essential to confirm the claimant qualifies and that the amount claimed is supportable from the contract and payment records.
Lien work is one part of the firm's construction law services for New Jersey contractors. If you are a subcontractor facing a stalled payment right now, the article on what an unpaid contractor can do in New Jersey gives an overview of all the options, of which a lien is only one.
The statute's requirements are detailed and fact-specific. Nothing on this page promises that a lien is available on your project or that a particular deadline applies; get advice on your own dates promptly.
Two procedures
Commercial and residential projects follow different paths
| Stage | Non-residential projects | Residential projects |
|---|---|---|
| First step | Lien claim prepared on the statutory form | Notice of Unpaid Balance and Application for Arbitration, served and filed first |
| Deadline | Strict; generally 90 days after the last date of work, services, equipment or materials | Strict and shorter; measured from the last date of work under a separate timetable |
| Before recording the lien | Service and filing requirements must be met | An expedited arbitration determines whether, and in what amount, a lien may be filed |
| Typical pressure point | Owner's sale, refinancing or loan closeout | Homeowner's financing and title, plus the arbitrator's decision |
The deadlines run from the last date work was actually performed, not from the invoice date or the date payment was refused, and negotiations do not extend them. Warranty or punch-list visits may not count as new work. Diarise the date on every job where money is owed.
For contractors and suppliers
Preserving a lien claim, step by step
This is the general sequence for a non-residential project. Residential work adds the Notice of Unpaid Balance and arbitration stage before any lien is recorded.
Confirm eligibility
Check your place in the contracting chain, whether you have a written contract, and whether the work qualifies as an improvement to the property.
Fix the last date of work
Establish, from logs and delivery records, the last day you supplied qualifying work or materials. That date drives the deadline.
Calculate the amount carefully
Include only sums due under the contract for work performed, with approved changes, less payments received. An inflated claim creates its own risk.
Prepare, serve and file
Complete the statutory form, file it with the county clerk where the property is located, and serve it on the required parties within the statutory time.
Enforce or resolve
A lien that is not resolved must be enforced by a lawsuit within the time the statute allows; many are resolved by payment or bonding before that.
When a lien is filed against you
Options for owners and general contractors
Owners and GCs on the receiving end of a lien are not without tools. The statute allows a lien to be discharged by bond or deposit, which moves the claim off the property and onto the security, so a sale or financing can proceed while the dispute continues. A lien that was filed late, by an ineligible claimant, or without following the required procedure may be open to challenge.
Claimants should also understand the downside. A lien filed for an amount the claimant knows is overstated, or filed without a basis, can expose the claimant to liability for the owner's costs and fees. That is one reason the firm checks the paperwork and the arithmetic before recommending a filing.
- Request the contract, change orders and payment history underlying the claim.
- Compare the lien amount with what is actually owed under the claimant's contract.
- Check the claimant's last date of work against the filing and service dates.
- Consider bonding off the lien if a closing or loan draw is imminent.
Bring to the first call
Information needed to evaluate a lien
- The contract or purchase order, and who signed it on each side
- The project address and the name of the record owner
- Whether the property is residential or non-residential
- Your last date of work or delivery, with supporting records
- Invoices, approved change orders and payments received
- Any lien waivers you have already signed on the project
Lien rights often run alongside contractual remedies and negotiation. For a worked example of how the pieces fit together, see the firm's hypothetical construction payment dispute.
Questions & answers
Construction lien questions
How long do I have to file a construction lien in New Jersey?
For non-residential projects the deadline is generally 90 days after the last date you provided work, services, equipment or materials. Residential projects follow a different, shorter sequence that begins with a Notice of Unpaid Balance and an arbitration step. Because the deadline runs from your last qualifying work and is strictly applied, speak with counsel well before it approaches.
What is a Notice of Unpaid Balance?
On residential construction, a claimant must first serve and file a Notice of Unpaid Balance and an application for expedited arbitration within the statutory period. The arbitrator decides whether a lien may be filed and for how much. Only after that determination is a residential lien recorded. Skipping or mistiming this step can cost the claimant the right to a lien altogether.
Can a subcontractor or supplier file a construction lien?
Often, yes. The statute protects contractors who deal directly with the owner and also certain subcontractors and suppliers further down the chain, but it does not extend indefinitely and the claimant generally needs a written contract. The amount a lower-tier claimant can recover through the lien may also be limited by what the owner still owes. Each case requires checking the contract chain.
What can an owner do when a lien is filed against the property?
An owner can review the lien for procedural defects, negotiate with the claimant, or discharge the lien by posting a bond or making a deposit as the statute allows, which frees the property while the dispute is resolved. The owner may also look to its general contractor, whose contract usually requires it to keep the project free of subcontractor liens.
What happens if a lien is filed for the wrong amount?
An honest mistake can often be corrected or resolved by agreement. But a claimant who knowingly overstates the amount or files without a basis can face liability for the owner's costs and attorneys' fees, and may lose the lien. That risk is why every figure in a lien claim should trace back to the contract, approved changes and the payment record.
Your attorney
Paul H. Appel, Esq.
Every matter at the firm is handled personally by Paul — the same attorney reads the documents, gives the advice and negotiates on your behalf.
- Education
- Columbia Law School, Juris Doctor (1967)
- Experience
- 58+ years in commercial and business law
- Focus for this matter
- Construction contracts, compliance, liens and payment disputes
- Office
- Freehold, NJ — serving Monmouth, Middlesex & Ocean Counties
Contact
Discuss Your Business Matter With Paul
Describe what the business is dealing with — a contract on your desk, a deal in progress, a dispute or a company you are about to form. You will hear back from the attorney who handles the work.
- Phone917-748-6124
- Office11 Crestwood Drive, Freehold, NJ 07728
- ConsultationsBy phone, video or in person by appointment
Start a conversation