What is a Mechanic’s Lien?

When a property owner fails to pay a contractor or subcontractor for supplies or services in connection with a construction project, the contractor or subcontractor can file a mechanic’s lien against the subject property. If the property owner ever wants to sell or refinance the property, he or she typically has to pay off the debt secured by the mechanic’s lien before being able to do so.

Why File a Mechanic’s Lien?

The mere threat of a mechanic’s lien motivates many property owners to pay contractors and subcontractors. When a property owner does not pay, a mechanic’s lien helps contractors and subcontractors collect the monies they are owed for a completed project. If you are a contractor or subcontractor who is not being paid for a construction project, a Monmouth County business attorney with construction litigation experience can help you understand all available legal remedies and assist you in filing a mechanic’s lien.

Filing a Mechanic’s Lien in New Jersey

In New Jersey, a contractor or subcontractor should file a mechanic’s lien when the construction work has been completed. The rules for filing a mechanic’s lien vary from state to state, and in New Jersey, the lien must be perfected. To perfect a lien for a residential project, you must follow certain steps:

  • File a Notice of Unpaid Balance and Right to File Lien—you must time the filing of this notice carefully, because you have to complete the mechanic’s lien process and file your lien within 90 days of the last day of work
  • Send a Notice and Demand for Arbitration to an arbitrator to have the lien valued—the arbitrator will have 30 days to make his or her decision
  • File a lien claim with the county clerk where the work was completed within 10 days of receiving a decision from the arbitrator—the lien amount must be the amount determined by the arbitrator and the lien must be filed within 90 days of the last day of work
  • Serve the lien claim on the property owner within 10 business days of filing it

To avoid making costly mistakes during the mechanic’s lien process that could render your lien unenforceable, work with a qualified contact an experienced attorney as soon as you run into collection problems.