|
Act Quickly When Placing a Lien on Residential Property
Those involved in design, construction and construction materials supply are most likely aware that they have the statutory right, under certain conditions, to file a lien claim against the property for which their services and materials are provided. A lien claim protects service and materials providers in the event that they are not fully paid. Generally, a lien claim must be filed within ninety days of the last day that services and/or materials were provided for the project. The New Jersey legislature, however, has imposed a time consuming "arbitration prerequisite" to filing a lien claim on residential property which must be observed. Thus, a party seeking to file a lien claim against residential property must contact its attorney as soon as possible after the last day that services and/or materials are provided. Otherwise, the opportunity to file a lien claim could be lost.
First Step - Demand For Arbitration
The New Jersey legislature enacted the statute N.J.S.A. 2A:44A-21 with regard to residential construction lien claims. That statute provides that the stability of the residential real estate market in New Jersey is essential to the health of New Jersey's economy. The statute further provides that the possibility of numerous construction liens by contractors and subcontractors over relatively small amounts of money poses a serious threat to the ability of homeowners to transfer title expeditiously.
On that basis, the statute dictates that a party filing a lien claim against residential property must first file a demand for arbitration with the American Arbitration Association to institute an expedited arbitration proceeding. It is intended that expedited arbitration will provide a quick and uniform procedure for resolving lien claims prior to protracted litigation. After filing the demand, the expedited arbitration will be conducted, and the arbitrator will have thirty days from his/her receipt of the demand for arbitration to determine 1) the validity and amount of the lien claim which may be filed, and 2) the validity and amount of any setoff or counterclaims to any lien claim which may be filed. Only then may a residential lien claim be filed.
If the required arbitration consumes the allotted thirty days, then a potential lien claimant must notify its attorney of its desire to file a lien claim at least thirty days in advance of its deadline. Assuming that it will take several days to prepare, mail and otherwise process the demand for arbitration and the post-arbitration lien claim, it is recommended that a client contact its attorney no less than forty days prior to the expiration of the lien claim deadline.
90-Day Limitation Period
The Appellate Division in Mansion Supply Company, Inc. v. Bapat (1997) emphasized that the time consuming arbitration period required for residential property does not provide an excuse to extend the ninety-day limitations period. The Court held, "All conditions precedent to the filing of a lien claim on a residential project ... must be satisfied in a sufficient time to comply with the ninety-day window ..."
Those who provide services and materials for residential projects must be aware of the differences between residential and commercial construction lien law. The Hill Wallack Construction Industry Practice Group can assist you in the appropriate procedures to ensure that you will not lose the opportunity to secure your services and materials with a construction lien because of statutory requirements and time limitations.
|
