If you’re a contractor who hasn’t been paid after completing a commercial or residential project in New Jersey, you may want to create a construction lien. Doing so makes it challenging for the owner to refinance or sell their property as the title may be unclear. Taking this action is one of the best ways to help persuade the owner to pay you.
Why set up a construction lien?
If the owner of the property you worked on is unsatisfied with the project’s final outcome, they may try to get out of paying you. Setting up a construction lien against the property can help resolve this issue.
Rules for commercial and residential construction liens
In most cases, a construction lien can only be used when a written contract has been created. It should contain the following:
- Nature of the work being done
- Materials being used for the project
- Agreed price
Releasing the construction lien is usually done when a successful resolution has been met. Typically, payment in full results in a release of the lien.
Filing a construction lien on the commercial project you haven’t been paid for must be done with a county clerk. This should be completed within 90 days of the last day that materials or services were provided.
For residential projects, you must file a Notice of Unpaid Balance and Right to File Lien within 90 days of the last day of service. The homeowner must also receive a copy of the notice within 10 days after it’s been filed. In the case of residential property, the next step is to try to find a resolution at an arbitration hearing.
Knowing more about residential and commercial construction liens can be highly informative if you’re a contractor or subcontractor. You should also understand liens if you own the property that had work completed on it.