New Jersey's Construction Lien Law and its Application to Residental Construction Contracts

New Jersey’s Construction Lien Law requires a contractor, material supplier and some professionals (Lien Claimants), to satisfy certain special conditions before a construction lien can be placed on residential property. Some of those conditions include a notice to be sent to the landowner that identifies the unpaid balance due to the Lien Claimant and the Lien Claimant’s right to file a lien if payment is not made. In addition, the Lien Claimant must first arbitrate the claim before a Construction Lien can be filed.

While one would ordinarily conclude that this special procedure was conceived to protect the mom and pop homeowner, a few years ago, a bankruptcy court in the District of New Jersey concluded that this process can also apply to multi- family development projects like condominiums and town houses. In that case the judge invalidated a number of construction liens placed on a multi- unit residential construction project because the Lien Claimants had failed to follow the procedure associate with filing construction liens on residential property.