New Jersey Speed Bumps

• New Jersey is an UNPAID BALANCE lien state.
• New Jersey' defined "residential construction" in 2011 as "construction of or improvement to a dwelling, or any portion thereof, or any residential unit, or any portion thereof." This definition applies broadly to any construction project that includes residential property. New Jersey Residential would include apartment buildings, condos, housing cooperatives, townhouses, single family homes and planned developments.  
• It is not necessary to serve the Notice Of Unpaid Balance And Right To File Lien in non-residential construction projects.
• Private Construction - A supplier to a supplier who falls within the first three tiers of the contracting chain and has a written contract may now file a lien. 
• Public Construction - Bond Claim rights are limited to the 3rd tier.  Suppliers to suppliers do not have bond claim rights.
• “Residential Construction” – A construction project which includes any residential units is deemed “residential” in nature. 

Mechanic’s Lien Speed Bumps

• Simultaneously with the service of the Notice Of Unpaid Balance And Right To File Lien the claimant must also serve a Demand for Arbitration and fulfill all the requirements of the American Arbitration Association (“AAA”) to institute an expedited proceeding before a single arbitrator designated by the AAA.
• If the arbitrator believes that the claimant's work may be defective, and that there are valid setoffs or counterclaims, the arbitrator may require the claimant to post security in an amount up to its potential lien. The arbitrator must issue his/her award within thirty (30) days of service of the claimant's arbitration demand.
• If the arbitrator determines that there is a valid lien claim, then the claimant has ten (10) days from receipt of the arbitrator's determination to file a Construction Lien Claim and comply with any other conditions directed by the arbitrator, or risk forfeiting the lien claim.

Foreclosure Speed Bumps

• Upon receipt of notice of a lien claim, the owner , or community association in accordance with section 3 of P.L.1993, c.318 (C.2A:44A-3), shall be authorized to withhold and deduct the amount claimed from the unpaid part of the contract price that is or thereafter may be due and payable to the contractor or subcontractor, or both. The owner or community association may pay the amount of the lien claim to the claimant unless the contractor or subcontractor against whose account the lien is filed notifies the owner and the lien claimant in writing within 20 days of service of the lien claim upon both the owner or community association and the contractor or subcontractor, that the claimant is not owed the monies claimed and the reasons therefor. Any such payment made by the owner or community association shall constitute a payment made on account of the contract price of the contract with the contractor or subcontractor, or both, against whose account the lien is filed.
• Discharge of Liens by Owner - Where the lien claim has been paid in full, the claimant has failed to discharge the lien, and 13 months have passed since the date of the lien claim, the owner may now unilaterally have the lien discharged. The owner must file a discharge certification and affidavit setting forth the circumstances of payment to summarily discharge the lien without court intervention.

• A late notice may be served but only traps unpaid funds from the date served.
• The payment bond shall be conditioned for the payment by the contractor of all indebtedness which may accrue to any person, firm or corporation designated as a "beneficiary" pursuant to N.J.S.2A:44-143, in an amount not exceeding the sum specified in the bond, on account of any labor performed or materials, provisions, provender or other supplies, or teams, fuels, oils, implements or machinery used or consumed in, upon, for or about the construction, erection, alteration or repair of the public building or public work or improvement.
• The payment bond shall be deposited with and be held by the board, officer or agent acting on behalf of the State, contracting unit or school district, for the use of any beneficiary thereof.
• P3 Public-private partnership projects: Payment bonds required. 

• The municipal lien claim covers towns, counties and most other public agencies, with the exception of projects contracted by the state of New Jersey or any state agency.

New Jersey Definitions 

• “Filing” - Delivering a document to the County Clerk is now defined as “lodging for record” as opposed to “indexing,” when the clerk files/ records the documents.
• Liens on Fee Interest - The fee interest (held by the landlord) is only subject to a lien claim in a limited number of circumstances.
• The Lien Fund - The statute provides more detailed guidance on calculating the lien fund in order to ensure than an owner will never pay more than once for the same work. 
• Liens Against Common Elements - The only remedy for claims against a community association is a court-ordered assessment against the unit owners.
• Suppliers to Suppliers can File Liens - A supplier to a supplier who falls within the first three tiers of the contracting chain and has a written contract may file a lien.
• Enforcement by Summary Action - Procedures and parameters for enforcing a lien in Superior Court are spelled out in the amendments to the CLL.
• Residential Construction Liens and the Allocation of Partial Payments - A lien claimant who receives a partial payment must release a share of interest in the property proportionate to each subdivision or tract.
• Discharge of Liens by Owner - Where the lien claim has been paid in full, the claimant has failed to discharge the lien, and 13 months have passed since the date of the lien claim, the owner may now unilaterally have the lien discharged.  The owner must file a discharge certification and affidavit setting forth the circumstances of payment to summarily discharge the lien without court intervention.