New Jersey Lien Laws
Resources for Mechanic’s Liens and Other Filings in New Jersey
New Jersey Lien Law Construction – Title 2A
New Jersey Lien Law Section 2A:44A-3 – Lien entitlement for work, services, etc.
Any contractor, subcontractor or supplier who provides work, services, material or equipment pursuant to a contract, shall be entitled to a lien for the value of the work or services performed, or materials or equipment furnished in accordance with the contract and based upon the contract price, subject to sections 6, 9, and 10 of P.L. 1993, c.318 (C. 2A:44A-6, 2A:44A-9and 2A:44A-10 ).
The lien shall attach to the interest of the owner or unit owner of the real property development, or be filed against the community association, in accordance with this section. b. For purposes of this section:(1) “interest of the owner of the real property development” includes interest in any residential or nonresidential units not yet sold or transferred and the proportionate undivided interests in the common elements attributable to those units;(2) “interest of the unit owner” includes the proportionate undivided interests in the common elements of the real property development;(3) “unit owner” means an owner of an interest in a residential or nonresidential unit who is not a developer of the property and acquires the unit after the master deed or master declaration is recorded, or after the public offering statement is filed with the Department of Community Affairs; and c. In the case of a condominium, notwithstanding the provisions of the “Condominium Act,” P.L. 1969, c.257 (C. 46:8B-1 et seq.), or in the case of any other real property development with common elements or common areas or facilities, if the contract is: 1) with the owner of the real property development, then the lien shall attach to the interest of the owner of the real property development; 2) with the community association, the lien claim shall be filed against the community association but shall not attach to any real property.
New Jersey Lien Law Section 2A:44A-6 – Filing lien claim
1. A contractor, subcontractor or supplier entitled to file a lien pursuant to section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ) shall do so according to the following process:
(1) The lien claim form as provided by section 8 of P.L. 1993, c.318 (C. 2A:44A-8 ) shall be signed, acknowledged and verified by oath of the claimant setting forth:(a) the specific work or services performed, or material or equipment provided pursuant to contract; and(b) the claimant’s identity and contractual relationship with the owner or community association and other known parties in the construction chain.(2) In all cases except those involving a residential construction contract, the lien claim form shall then be lodged for record within 90 days following the date the last work, services, material or equipment was provided for which payment is claimed. In the case of a residential construction contract, the lien claim form shall be lodged for record, as required by paragraph (8) of subsection b. of section 21 of P.L. 1993, c.318 (C. 2A:44A-21 ), not later than 10 days after receipt by the claimant of the arbitrator’s determination, and within 120 days following the date the last work, services, material or equipment was provided for which payment is claimed. If requested, at the time of lodging for record, the clerk shall provide a copy of the lien claim form marked with a date and time received.
2. A lien shall not attach or be enforceable unless the lien claim or other document permitted to be filed is:
(1) filed in the manner and form provided by this section and section 8 of P.L. 1993, c.318 (C. 2A:44A-8 ); and(2) a copy thereof served in accordance with section 7 of P.L. 1993, c.318 (C. 2A:44A-7 ), except that every document lodged for record that satisfies the requirements of this section, even if not yet filed, shall be enforceable against parties with notice of the document. A document shall be first filed, however, in order to be enforceable against third parties without notice of the document, including, but not limited to, an owner, bona fide purchaser, mortgagee, grantee of an easement, or a lessee or a grantee of any other interest in real estate.
c. In the case of a residential construction contract the lien claim shall also comply with section 20 of P.L. 1993, c.318 (C. 2A:44A-20 ) and section 21 of P.L. 1993, c.318 (C. 2A:44A-21 ).
d. For purposes of this act, warranty or other service calls, or other work, materials or equipment provided after completion or termination of a claimant’s contract shall not be used to determine the last day that work, services, material or equipment was provided.
New Jersey Lien Law
Section 2A:44A-7 – Serving of lien claim by claimant
- Within 10 days following the lodging for record of a lien claim, the claimant shall serve on the owner, or community association in accordance with section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ), and, if any, the contractor and subcontractor against whom the claim is asserted, a copy of the completed and signed lien claim substantially in the form prescribed by section 8 of P.L. 1993, c.318 (C. 2A:44A-8 ) and marked “received for filing” or a similar stamp with a date and time or other mark indicating the date and time received by the county clerk. Service shall be by personal service as prescribed by the Rules of Court adopted by the Supreme Court of New Jersey or by:
(1) simultaneous registered or certified mail or commercial courier whose regular business is delivery service; and(2) ordinary mail addressed to the last known business or residence address of the owner or community association, contractor or subcontractor. A lien claim served upon a community association need not be served upon individual “unit owners” as defined in section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ).
b. The service of the lien claim provided for in this section shall be a condition precedent to enforcement of the lien; however, the service of the lien claim outside the prescribed time period shall not preclude enforceability unless the party not timely served proves by a preponderance of the evidence that the late service has materially prejudiced its position. Disbursement of funds by the owner, community association, a contractor or a subcontractor who has not been properly served, or the creation or conveyance of an interest in real property by an owner who has not been properly served, shall constitute prima facie evidence of material prejudice.
New Jersey Lien Law
Section 2A:44A-9 – Amount of Lien Claim
a. The amount of a lien claim shall not exceed the unpaid portion of the contract price of the claimant’s contract for the work, services, material or equipment provided.
b. Except as set forth in sections 15 and 21 of P.L. 1993, c.318 (C. 2A:44A-15 and 2A:44A-21 ), and subject to section 7 of P.L. 1993, c.318 (C. 2A:44A-7 ) and subsection c. of this section, the lien fund shall not exceed:
(1) in the case of a first tier lien claimant or second tier lien claimant, the earned amount of the contract between the owner and the contractor minus any payments made prior to service of a copy of the lien claim; or(2) in the case of a third tier lien claimant, the lesser of: (a) the amount in paragraph (1) above; or (b) the earned amount of the contract between the contractor and the subcontractor to the contractor, minus any payments made prior to service of a copy of the lien claim.
c. A lien fund regardless of tier shall not be reduced by payments by the owner, or community association in accordance with section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ), that do not discharge the obligations for the work performed or services, material or equipment provided, including, but not limited to:
(1) payments not in accordance with written contract provisions;(2) payments yet to be earned upon lodging for record of the lien claim;(3) liquidated damages;(4) collusive payments;(5) use of retainage to make payments to a successor contractor after the lien claim is lodged for record; or(6) setoffs or backcharges, absent written agreement by the claimant, except for any setoffs upheld by judgment that are first determined by: (a) arbitration or alternate dispute resolution in a proceeding conducted in accordance with section 21 of P.L. 1993, c.318 (C. 2A:44A-21 ); or (b) any other alternate dispute resolution agreed to by the parties.
d. Subject to subsection c. above, no lien fund exists, if, at the time of service of a copy of the lien claim, the owner or community association has fully paid the contractor for the work performed or for services, material or equipment provided.
e. For purposes of a lien fund calculation, the “earned amount of the contract” is the contract price unless the party obligated to perform has not completed the performance in which case the “earned amount of the contract” is the value, as determined in accordance with the contract, of the work performed and services, material or equipment provided.
f. If more than one lien claimant will participate in a lien fund, the lien fund shall be established as of the date of the first of the participating lien claims lodged for record unless the earned amount of the contract increases, in which case the lien fund shall be calculated from the date of the increase.
g. No lien rights shall exist for other than first, second, or third tier lien claimants.
New Jersey Lien Law
Section 2A:44A-11 – Amendment of Lien claim
a. A lien claim may be amended for any appropriate reason, including but not limited to correcting inaccuracies or errors in the original lien claim form, or revising the amount claimed because of:
(1) additional work performed or services, material, or equipment provided;(2) the release of a proportionate share of an interest in real property from the lien in accordance with section 18 of P.L. 1993, c.318 (C. 2A:44A-18 ); or(3) the partial payment of the lien claim.
A lien claim may not be amended to cure a violation of section 15 of P.L. 1993, c.318 (C. 2A:44A-15 ).
b. The amended lien claim, which shall be filed with the county clerk, shall comply with all the conditions and requirements for the filing of an original lien claim, including but not limited to the notice requirements of section 7 of P.L. 1993, c.318 (C. 2A:44A-7 ) and shall be subject to the limitations of sections 9 and 10 of P.L. 1993, c.318 (C. 2A:44A-9 and 2A:44A-10 ). That portion of the amended lien in excess of the amount previously claimed shall attach as of the date of filing of the original lien claim. That excess amount shall also be used to calculate the lien fund pursuant to subsection f. of section 9 of P.L. 1993, c.318 (C. 2A:44A-9 ).
c. The amended lien claim shall be filed in substantially the following form:
New Jersey Lien Law
Section 2A:44A-14 – Claimant’s failure to commence action; forfeiture, liability
a. A claimant filing a lien claim shall forfeit all rights to enforce the lien, and shall immediately discharge the lien of record in accordance with section 30 of P.L. 1993, c.318 (C. 2A:44A-30 ), if the claimant fails to commence an action in the Superior Court, in the county in which the real property is situated, to enforce the lien claim:
(1) Within one year of the date of the last provision of work, services, material or equipment, payment for which the lien claim was filed; or(2) Within 30 days following receipt of written notice, by personal service or certified mail, return receipt requested, from the owner, community association, contractor, or subcontractor against whose account a lien claim is filed, requiring the claimant to commence an action to enforce the lien claim.
b. Any lien claimant who forfeits a lien pursuant to this section and fails to discharge that lien of record in accordance with section 30 of P.L. 1993, c.318 (C. 2A:44A-30 ), shall be liable for all court costs, and reasonable legal expenses, including, but not limited to, attorneys’ fees, incurred by the owner, community association, contractor, or subcontractor, or the total costs and legal expenses of all or any combination of them, in defending or causing the discharge of the lien claim. The court shall, in addition, enter judgment against the claimant who fails to discharge the lien for damages to any of the parties adversely affected by the lien claim.
c. (Deleted by amendment , P.L. 2010, c 119 )
d. Any disputes arising out of the improvement which is the subject of a lien claim but which are unrelated to any action to enforce a lien claim may be brought in a separate action or in a separate count in the same action.
New Jersey Lien Law
Section 2A:44A-15 – Improper lodging of lien claim; forfeiture of rights; liability
a. If a lien claim is without basis, the amount of the lien claim is willfully overstated, or the lien claim is not lodged for record in substantially the form or in the manner or at a time not in accordance with this act, the claimant shall forfeit all claimed lien rights and rights to file subsequent lien claims to the extent of the face amount claimed in the lien claim. The claimant shall also be liable for all court costs, and reasonable legal expenses, including, but not limited to, attorneys’ fees, incurred by the owner, community association, contractor or subcontractor, or any combination of owner, community association in accordance with section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ), contractor and subcontractor, in defending or causing the discharge of the lien claim. The court shall, in addition, enter judgment against the claimant for damages to any of the parties adversely affected by the lien claim.
b. If a defense to a lien claim is without basis, the party maintaining the defense shall be liable for all court costs, and reasonable legal expenses, including, but not limited to, attorneys’ fees, incurred by any of the parties adversely affected by the defense to the lien claim. The court shall, in addition, enter judgment against the party maintaining this defense for damages to any of the parties adversely affected thereby.
c. If a lien claim is forfeited pursuant to this section, or section 14 of P.L. 1993, c.318 (C. 2A:44A-14 ), nothing herein shall be construed to bar the filing of a subsequent lien claim, provided, however, any subsequent lien claim shall not include a claim for the work, services, equipment or material claimed within the forfeited lien claim.
d. For the purpose of this section “without basis” means frivolous, false, unsupported by a contract, or made with malice or bad faith or for any improper purpose.
New Jersey Lien Law
Section 2A:44A-22 – Priority of mortgages over Liens
a. Every mortgage recorded before the filing of a lien claim or the filing of a Notice of Unpaid Balance and Right to File Lien in accordance with section 20 of P.L. 1993, c.318 (C. 2A:44A-20 ), shall have priority as to the land or other interest in real property described and any improvement wholly or partially erected or thereafter to be erected, constructed or completed thereon, over any lien established by virtue of P.L. 1993, c.318 (C. 2A:44A-1 et al.) to the extent that:
(1) the mortgage secures funds that have been advanced or the mortgagee is obligated to advance to or for the benefit of the mortgagor before the filing of the lien claim or Notice of Unpaid Balance and Right to File Lien in accordance with section 20 of P.L. 1993, c.318 (C.2A:44A-20); or(2) the mortgage secures funds advanced after the filing of a lien claim or the filing of a Notice of Unpaid Balance and Right to File Lien in accordance with section 20 of P.L. 1993, c.318 (C.2A:44A-20), and the funds are applied in accordance with paragraphs (1) through (7) of subsection b. of this section.
b. Every mortgage recorded after the filing of a lien claim or the filing of a Notice of Unpaid Balance and Right to File Lien in accordance with section 20 of P.L. 1993, c.318 (C.2A:44A-20), shall have priority as to the land or other interest in real property described and any improvement wholly or partially erected or thereafter to be erected, constructed or completed thereon, over any lien established by virtue of this act to the extent that the mortgage secures funds which have been applied to:
(1) The payments of amounts due to any claimants who have filed a lien claim or a Notice of Unpaid Balance and Right to File Lien;(2) The payment to or the securing of payment by, the party against whose interest the lien claim is filed of all or part of the purchase price of the land covered thereby and any subsequent payment made for the improvements to the land, including but not limited to any advance payment of interest to the holder of the mortgage as required by the mortgagee as a condition of the loan;(3) The payment of any valid lien or encumbrance which is, or can be established as, prior to a lien provided for by this act;(4) The payment of any tax, assessment or other State or municipal lien or charge due or payable at the time of, or within 60 days after, such payment, as required by the mortgagee as a condition of the loan;(5) The payment of any premium, counsel fee, consultant fee, interest or financing charges, or other cost related to the financing, any of which are required by the lender to be paid by the owner, provided that the total of same shall not be in excess of 10 percent of the principal amount of the mortgage securing the loan upon which they are based;(6) The payment to the owner of that portion of the purchase price of the real property on which the improvements are made or to be made which have previously been paid by the owner, exclusive of any interest or any other carrying costs of such real property, provided, however, that at the time of the payment of such funds to the owner, the budget upon which the loan was made indicated that the amount of the loan is not less than the total of: (a) the purchase price of the real property, (b) the cost of constructing the improvements, and (c) any cost listed in paragraphs (3), (4), and (5) of subsection b. of this section; or(7) An escrow in an amount not to exceed 150% of the amount necessary to secure payment of charges described in paragraphs (1), (3), (4) and (5) of subsection b. of this section.
c. Nothing in P.L. 1993, c.318 (C. 2A:44A-1 et al.) shall be deemed to supersede the mortgage priority provisions of 46:9-8 or diminish the effect of a Notice of Settlement filed pursuant to P.L. 1979, c.406 (C. 46:16A-1 et seq.).
New Jersey Lien Law
Section 2A:44A-24.1 – Lien claims enforced by suit
a. Subject to the requirements of section 14 of P.L. 1993, c.318 (C. 2A:44A-14 ), and in the case of lien claims arising from residential construction contracts the additional requirements of sections 20 and 21 of P.L. 1993, c.318 (C. 2A:44A-20 and 2A:44A-21 ), a lien claim arising under P.L. 1993, c.318 (C. 2A:44A-1 et al.) shall be enforced by a suit commenced in the Superior Court within one year of the date of the last provision of work, services, material or equipment, payment for which the lien claim was filed. Venue shall be laid in the county in which the real property affected by the lien claim is located.
b. A lien claimant shall join as party defendants the owner or community association, if applicable, in accordance with section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ), contractor or subcontractor alleged to have failed to make payments for which the lien claim has been filed and any other person having an interest in the real property that would be adversely affected by the judgment. The court shall order joinder of necessary parties or determine if it is appropriate for the suit to proceed if party defendants are not joined.
c. The court shall stay the suit to the extent that the lien claimant’s contract or the contract of another party against whose account the lien claim is asserted provides that any disputes pertaining to the validity or amount of a lien claim are subject to arbitration or other dispute resolution mechanism.
d. Upon commencement of the suit, the lien claimant shall cause a Notice of Lis Pendens to be filed in the office of the county clerk or register pursuant to N.J.S. 2A:15-6 et seq.
e. A party to a suit to enforce a lien claim shall be entitled to assert any defense available to any other party in contesting the amount for which a claimant seeks to have the lien reduced to judgment.
f. The judgment to be entered in a suit to enforce a lien claim shall (1) establish the amount due to the lien claimant; and (2) direct the public sale by the sheriff or other such officer as the court may direct of the real property and improvement affected by the lien. The proceeds of the sale shall be distributed in accordance with section 23 of P.L. 1993, c.318 (C. 2A:44A-23 ). If funds are realized at the sale in an amount greater than the lien fund, the surplus funds shall be distributed in accordance with law.
g. Nothing in this act shall bar recovery of money damages pursuant to a lien claim arising under P.L. 1993, c.318 (C. 2A:44A-1 et al.).
h. A judgment obtained against a community association that is unpaid may be enforced by assessment against unit owners as they would be assessed for any other common expense, after reasonable notice, and in a manner directed by the court. In ordering assessments, the court shall be guided by the master deed, bylaws or other document governing the association. A judgment shall not be enforced by the sale of any common elements, common areas or common buildings or structures of a real property development.
i. Upon resolution of the suit other than by the entry of final judgment in favor of the plaintiff in accordance with subsection f. of this section, a cancellation or discharge of lis pendens should be filed, by the party who filed the enforcement action, in the office of the county clerk or register where the notice of lis pendens is filed.
New Jersey Lien Law
Section 2A:44A-30 – Filing of certificate to discharge Lien claim of record
a. When a lien claim has been filed and the claim has been paid, satisfied or settled by the parties or forfeited by the claimant, the claimant or claimant’s successor in interest or attorney shall, within 30 days of payment, satisfaction or settlement, or within 7 days of demand by any interested party, file with the county clerk a certificate, duly acknowledged or proved, directing the county clerk to discharge the lien claim of record, which certificate shall contain:
(1) The date of filing the lien claim;(2) The book and page number endorsed thereon;(3) The name of the owner of the land, or the community association, if applicable, named in the notice;(4) The location of the property; and(5) The name of the person for whom the work, services, equipment or materials was provided.
b. If the claimant shall fail or refuse to file this certificate, as set forth in subsection a. of this section, then any party in interest may proceed in a summary manner by filing an order to show cause in accordance with the Rules of Court adopted by the Supreme Court of New Jersey. A judge of the Superior Court may, upon good cause being shown, and absent receipt of written objections and grounds for same, order the lien claim discharged on the return date of the order to show cause. The county clerk shall thereupon attach the certificate or order to the original notice of lien claim on file and shall note on the record thereof “discharged by certificate” or “discharged by court order,” as the case may be and any lien foreclosure action shall be dismissed with prejudice.
c. Any party in interest may proceed to discharge a lien claim on the ground that it is without factual basis by filing an order to show cause in the same manner as set forth in subsection b. of this section.
d. In those circumstances in which the lien claim has been paid in full, the lien claimant has failed to file a lien claim discharge pursuant to this section, and at least 13 months have elapsed since the date of the lien claim, the owner or community association may, in accordance with section 33 of P.L. 1993, c.318 (C. 2A:44A-33 ) submit for filing a duly acknowledged discharge certificate substantially in the form provided by subsection a. of this section accompanied by an affidavit setting forth the circumstances of payment.
New Jersey Lien Law
Section 2A:44A-31 – Filing of surety bond, deposit
a. When a lien claim is filed against any improvement and land under this act, the owner, community association in accordance with section 3 of P.L. 1993, c.318 (C. 2A:44A-3 ), contractor or subcontractor may execute and file with the proper county clerk a bond in favor of the lien claimant, with a surety company, duly authorized to transact business in this State, as surety thereon in an amount equal to 110% of the amount claimed by the lien claimant. The amount of the bond shall be equal to 110% of the amount claimed by the lien claimant but in the case of a lien claim arising from a residential construction contract, no greater than the earned amount of the contract between the owner and the contractor as determined by the arbitrator in accordance with paragraph (4) of subsection b. of section 21 of P.L. 1993, c.318 (C. 2A:44A-21 ). The bond shall be filed in accordance with the language set forth in subsection d. of this section, along with payment in the amount of $25, conditioned upon the payment of any judgment and costs that may be recovered by the lien claimant under this claim. Any form of bond proffered that contains language inconsistent with the language set forth in subsection d. of this section shall be the basis for a cause of action to strike such language from the form of bond.
b. As an alternative, the owner, community association, contractor or subcontractor may deposit with the clerk of the Superior Court of New Jersey, funds constituting an amount equal to 110% of the amount claimed by the lien claimant, but in the case of a lien claim arising from a residential construction contract, no greater than the earned amount of the contract between the owner and the contractor as determined by the arbitrator in accordance with paragraph (4) of subsection b. of section 21 of P.L. 1993, c.318 (C. 2A:44A-21 ). The deposit shall be made along with payment in the amount of $25, conditioned upon the payment of any judgment and costs that may be recovered by the lien claimant under this claim. The deposit may be made without the necessity of commencing any legal action. The written receipt provided by the court clerk for the deposit made may be filed with the county clerk as evidence of that deposit.
c. Any surety bond filed with the county clerk under this section shall be discharged, and any deposit with the clerk of the Superior Court shall be returned to the depositor, without court order, upon presentment by the owner, community association, contractor or subcontractor of any of the following:
(1) a duly acknowledged certificate as provided in paragraph (2) or (3) of subsection a. of section 33 of P.L. 1993, c.318 (C. 2A:44A-33 );
(2) an order of discharge as provided in paragraph (4) of subsection a. of section 33 of P.L. 1993, c.318 (C. 2A:44A-33 );
(3) a judgment of dismissal or other final judgment against the lien claimant; or
(4) a true copy of a Stipulation of Dismissal, with prejudice, executed by the lien claimant or its representative in any action to foreclose the lien claim which is subject to the surety bond or deposit.
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