New Jersey Revises Construction Lien Law
On January 5, 2011,
The bill revises the “Construction Lien Law,” P.L.1993, c.318 (2A:44A-1 et al.), which provides a statutory scheme for private contractors, subcontractors and suppliers to secure payment for their labor and materials, while not impeding the free transfer of real property, through a lien filing process. The bill embodies the text of the New Jersey Law Revision Commission’s Final Report on the Construction Lien Law.
This bill revises the "Construction Lien Law," which was enacted in 1993, by:
(1) clarifying and adding certain defined terms, to conform to actual construction industry usage;
(2) clarifying procedures for the filing and amending of the lien claim and for the calculation, distribution and enforcement of the lien fund;
(3) providing more specific provisions for discharging a satisfied lien claim;
(4) further defining the arbitrator’s role;
(5) modifying time limits for filing and perfecting residential construction contract lien claims;
(6) specifying the application of lien claims to community association property; and
(7) addressing certain ambiguities as to mortgage priorities with respect to lien claims.
The bill is intended to enhance application of the 1993 act and make clearer the procedures to be followed in order to process and perfect a construction lien claim.
Among the more significant changes to the bill was an inclusion that requires county clerks to, upon request at the time of lodging for record, provide a copy of the lien claim form marked with the date and time received. A construction lien that is lodged for record means “a document that is delivered to the county clerk and marked by the clerk with a date and time stamp or other mark indicating the date and time received. A lien claim that is “lodged for record” is enforceable against anyone once notice of the lodging is provided, but does not affect the rights of parties who have not received notice until the construction lien is actually filed by the clerk. This section of the revised lien law was added to alleviate problems caused by the filing backlog experienced in several counties.
The bill also clarifies that an action to have a construction lien claim discharged may be filed 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.
The bill was pre-filed for introduction in the 2010-2011 session pending technical review. The revisions to the Construction Lien Law were passed unanimously by the New Jersey Assembly on June 21, 2010 and by the New Jersey Senate on November 22, 2010.