[Second Reprint]
ASSEMBLY, No. 2752
STATE OF NEW JERSEY
208th LEGISLATURE
INTRODUCED JANUARY 7, 1999
Sponsored by:
Assemblyman GERALD J. LUONGO
District 4 (Camden and Gloucester)
Assemblyman PETER J. BIONDI
District 16 (Morris and Somerset)
Co-Sponsored by:
Assemblyman Kramer and Assemblywoman Watson Coleman
SYNOPSIS
Changes time period for filing certain lien claim.
CURRENT VERSION OF TEXT
As amended by the General Assembly on May 10, 1999.
(Sponsorship Updated As Of: 2/19/1999)
An Act concerning construction lien claims and amending P.L.1993,
c.318.
Be It Enacted by the Senate and General Assembly of the State
of New Jersey:
1. Section 6 of P.L.1993, c.318 (C.2A:44A-6) is amended to read as follows:
6. A lien claim shall be signed, acknowledged and verified by oath of the claimant or, in the case of a partnership or corporation, a partner or duly authorized officer thereof, and, for lien claims arising under contracts other than residential construction contracts, filed with the county clerk not later than 90 days following the date the last work, services, material or equipment was provided for which payment is claimed; and, for lien claims arising under residential construction contracts, filed with the county clerk not later than 120 days following the date the last work, services, material or equipment was provided for which payment is claimed . No lien shall attach, or be enforceable under the provisions of this act and, in the case of a residential construction contract, be in compliance with sections 20 and 21 of this act, unless the lien claim is filed in the form, manner and within the time provided by this section and section 8 of this act, and a copy thereof served on the owner and, if any, the contractor and the subcontractor, against whom the claim is asserted, pursuant to section 7 of this act.
For purposes of this act, warranty or other service calls, or other work, materials or equipment provided after completion or termination of a claimant's contract shall not be used to determine the last day that work, services, material or equipment was provided.
(cf: P.L.1993, c.318, s.6)
2. Section 8 of P.L.1993, c.318 (C.2A:44A-8) is amended to read as follows:
8. The lien claim shall be filed in substantially the following form:
CONSTRUCTION LIEN CLAIM
TO THE CLERK, COUNTY OF :
In accordance with the terms and provisions of the "Construction Lien Law," P.L.1993, c.318 (C.2A:44A-1 et al.), notice is hereby given that:
1. (Name of claimant) of (address of claimant) has on (date) claimed a construction lien against the below stated real property of (owner against whose property the lien is claimed), in the amount of ($ ), for the value of the work, services, material or equipment provided in accordance with a contract with (name of contracting party with whom claimant has a contract) for the following work, services, materials or equipment:
a.
b.
c. (etc.)
2. The amount due for work, services, materials or equipment delivery provided by claimant in connection with the improvement of the real property, and upon which this lien claim is based, is as follows:
Total contract amount: $
Amendments to contract: $
Total contract amount
and amendments to contract: $
Less: Agreed upon
credits: $
Contract amount paid
to date: $
Amendments to contract
amount paid to date: $
TOTAL REDUCTIONS FROM CONTRACT
AMOUNT AND AMENDMENTS TO
CONTRACT: $
TOTAL LIEN CLAIM AMOUNT: $
Notice of Unpaid Balance and Right to File Lien (if any) was previously filed with the County Clerk of County on 19 as No. in Book Page .
3. This construction lien is claimed against the interest of
(name) as (check one):
Owner
Lessee
Other (describe)
in that certain tract or parcel of land and premises described as Block , Lot , on the tax map of the of , County of , State of New Jersey, for the improvement of which property the aforementioned work, services, materials or equipment was provided.
4. The work, services, materials or equipment was provided pursuant to the terms of a written contract (or, in the case of a supplier, a delivery or order slip signed by the owner, contractor, or subcontractor having a direct contractual relation with a contractor, or an authorized agent of any of them), dated , between (claimant) and (name of other contracting party) of (address).
5. The date of the provision of the last work, services, material or
equipment for which payment is claimed is (date).
NOTICE TO OWNER OF REAL PROPERTY
Your real estate may be subject to sale to satisfy the amount asserted by this claim. However, your real estate cannot be sold until the facts and issues which form the basis of this claim are decided in a legal proceeding before a court of law. The lien claimant is required by law to commence suit to enforce this claim.
The claimant filing this lien claim shall forfeit all rights to enforce the lien and shall be required to discharge the lien of record, if the claimant fails to bring an action in the Superior Court, in the county in which the real property is situated, to establish the lien claim:
1. Within one year of the date of the last provision of work, services, material or equipment, payment for which the lien claim was filed; or
2. Within 30 days following receipt of written notice, by personal service or certified mail, return receipt requested, from the owner requiring the claimant to commence an action to establish the lien claim.
You will be given proper notice of the proceeding and an opportunity to challenge this claim and set forth your position. If, after you (and/or your contractor or subcontractor) have had the opportunity to challenge this lien claim, the court of law enters a judgment against you and in favor of the claimant filing this lien claim, and thereafter you fail to pay that judgment, your real estate may then be sold to satisfy the judgment.
You may choose to avoid subjecting your real estate to sale by doing either of the following:
1. You (or your contractor or subcontractor) can pay the claimant and obtain a discharge of lien claim from the claimant; or
2. You (or your contractor or subcontractor) can cause the lien claim to be discharged by filing a surety bond or making a deposit of funds as provided for in section 31 of P.L.1993, c.318 (C.2A:44A-31). If you (or your contractor or subcontractor) choose to pay the claimant under 1. above, you will lose your right to challenge this lien claim in a legal proceeding before a court of law.
If you (or your contractor or subcontractor) choose to discharge the lien claim by filing a surety bond or making a deposit of funds as provided in section 31 of P.L.1993, c.318 (C.2A:44A-31), you will retain your right to challenge this lien claim in a legal proceeding before a court of law.
NOTICE TO SUBCONTRACTOR OR CONTRACTOR:
This lien has been filed with the county clerk and served upon the owner of the real estate. This lien places the owner on notice that the real estate may be sold to satisfy this claim unless the owner pays the claimed sum to this claimant.
Signed
For
Individual, Firm or Corporation
Date:
CLAIMANT'S REPRESENTATION AND VERIFICATION
Claimant represents and verifies that:
1. The amount claimed herein is due and owing at the date of filing, pursuant to claimant's contract described in the construction lien claim.
2. The work, services, material or equipment for which this lien claim is filed was provided exclusively in connection with the improvement of the real property which is the subject of this claim. 3. (Select a. or b. as appropriate.)
a. This claim, arising under a contract other than a residential construction contract, has been filed within 90 days from the last date upon which the work, services, materials or equipment for which payment is claimed was provided.
b. This claim, arising under a residential construction contract, has been filed within 120 days from the last date upon which the work, services, materials or equipment for which payment is claimed was provided.
4. The foregoing statements made by me are true, to the best of my knowledge. I am aware that if any of the foregoing statements made by me are false, this construction lien claim will be void and that I will be liable for damages to the owner or any other person injured as a consequence of the filing of this lien claim.
Name of Claimant
Signed
Type or Print Name and Title
Date:
(cf: P.L.1993, c.318, s.8)
3. Section 20 of P.L.1993, c.318 (C.2A:44A-20) is amended to read as follows:
20. All valid liens filed pursuant to this act shall attach to the interest of the owner from the time of filing of the lien claim in the office of the county clerk, subject to the provisions of section 10 of this act.
a. In the event of the creation, conveyance, lease or mortgage of an estate or interest in real property to which improvements have been made that are subject to the lien provisions of this act, a lien claim validly filed under this act shall have priority over any prior creation, conveyance, lease or mortgage of an estate or interest in real property, only if the claimant has filed with the county clerk prior to that creation, conveyance, lease or mortgage, a Notice of Unpaid Balance and Right to File Lien in substantially the following form:
TO THE CLERK, COUNTY OF :
In accordance with the terms and provisions of the "Construction Lien Law," P.L.1993, c.318 (C.2A:44A-1 et al.), notice is hereby given that:
1. (Name of claimant) of (address of claimant) has on (date) a potential construction lien against the below described property of (owner against whose property the lien will be claimed), in the amount of ($ ), for the value of the work, services, material or equipment provided in accordance with a contract with (name of contracting party with whom claimant has a contract) for the following work, services, materials or equipment:
a.
b.
c. (etc.)
2. The amount due for work, services, materials or equipment provided by claimant in connection with the improvement of the real property, and upon which this lien claim is based is as follows:
Total contract amount: $
Amendments to contract: $
Total contract amount
and amendments to contract: $
Less: Agreed upon
credits: $
Contract amount paid
to date: $
Amendments to contract
amount paid to date: $
TOTAL REDUCTIONS FROM CONTRACT
AMOUNT AND AMENDMENTS TO
CONTRACT: $
TOTAL LIEN CLAIM AMOUNT: $
3. This construction lien is to be claimed against the interest of (name) as (check one):
Owner
Lessee
Other (describe) : in that certain tract or parcel of land and premises described as Block , Lot , on the tax map of the of , County of , State of New Jersey, for the improvement of which property the aforementioned work, services, materials or equipment was provided. 4. The work, services, materials or equipment was provided pursuant to the terms of a written contract (or, in the case of a supplier, a delivery or order slip signed by the owner, contractor, or subcontractor having a direct contractual relation with a contractor, or an authorized agent of any of them), dated , between (claimant) and (name of other contracting party) of (address) .
5. The date of the provision of the last work, services, material or equipment for which payment is claimed is (date).
6. The written contract (is) (is not) (cross out inapplicable portion) a residential construction contract as defined in section 2 of this act.
7. This notification has been filed prior or subsequent to completion of the work, services, materials or equipment as described above. The purpose of this notification is to advise the owner and any other person who is attempting to encumber or take transfer of said property described above that a potential construction lien may be filed within the 90 day period, or 120 day period if the written contract is a residential construction contract, following the date of the provision of the last work, services, materials or equipment as set forth in paragraph 5.
Claimant
CLAIMANT'S REPRESENTATION AND VERIFICATION
Claimant represents and verifies that:
1. The amount claimed herein is due and owing at the date of filing, pursuant to claimant's contract described in the Notice of Unpaid Balance and Right to File Lien.
2. The work, services, material or equipment for which this Notice of Unpaid Balance and Right to File Lien is filed was provided exclusively in connection with the improvement of the real property which is the subject of this Notice of Unpaid Balance and Right to File Lien.
3. The Notice of Unpaid Balance and Right to File Lien has been filed within 90 days, or 120 days, as appropriate, from the last date upon which the work, services, materials or equipment for which payment is claimed was provided.
4. The foregoing statements made by me are true, to the best of my
knowledge.
Name of Claimant
Signed
Type or Print Name and Title
Date:
b. In the event that the claimant elects to file a Notice of Unpaid Balance and Right to File Lien as described above, it shall not be necessary to serve a copy of said Notice of Unpaid Balance and Right to File Lien upon any interested party.
c. After the filing of a Notice of Unpaid Balance and Right to File Lien, any person claiming title to or an estate or interest in or a lien upon the real property described in the Notice of Unpaid Balance and Right to File Lien, shall be deemed to have acquired said title, estate, interest or lien with knowledge of the anticipated filing of a lien claim, and shall be subject to the terms, conditions and provisions of that lien claim within the period provided by section 6 of this act and as set forth in the Notice of Unpaid Balance and Right to File Lien. A Notice of Unpaid Balance and Right to File Lien filed under the provisions of this act shall be subject to the effect of a notice of settlement filed pursuant to P.L.1979, c.406 (C.46:16A-1 et seq.).
d. [The] (1) With respect to lien claims arising under contracts other than residential construction contracts, the Notice of Unpaid Balance and Right to File Lien shall be effective for 90 days from the date of the provision of the last work, services, materials or equipment delivery for which payment is claimed as set forth in paragraph 5 of the Notice of Unpaid Balance and Right to File Lien.
(2) With respect to lien claims arising under residential construction contracts, the Notice of Unpaid Balance and Right to File Lien shall be effective for 120 days from the date of the provision of the last work, services, materials or equipment delivery for which payment is claimed as set forth in paragraph 5 of the Notice of Unpaid Balance and Right to File Lien.
e. The filing of a Notice of Unpaid Balance and Right to File Lien shall not constitute the filing of a lien claim in accordance with the provisions of this act, nor does it extend the time for the filing of a lien claim in accordance with the provisions of this act.
f. Failure to file a Notice of Unpaid Balance and Right to File Lien shall not affect the claimant's lien rights arising under the provisions of this act, to the extent that no creation, conveyance, lease or mortgage of an interest in real property has taken place prior to the filing of a Notice of Unpaid Balance and Right to File Lien or lien claim.
g. A Notice of Unpaid Balance and Right to File Lien may be
amended by the filing of an Amended Notice of Unpaid Balance and
Right to File Lien in accordance with the provisions of this section.
(cf: P.L.1993, c.318, s.20)
4. Section 21 of P.L.1993, c.318 (C.2A:44A-21) is amended to read as follows:
21. a. The Legislature finds that the ability to sell and purchase residential housing is essential for the preservation and enhancement of the economy of the State of New Jersey and that while there exists a need to provide contractors, subcontractors and suppliers with statutory benefits to enhance the collection of money for goods, services and materials provided for the construction of residential housing in the State of New Jersey, the ability to have a stable marketplace in which families can acquire homes without undue delay and uncertainty and the corresponding need of lending institutions in the State of New Jersey to conduct their business in a stable environment and to lend money for the purchase or finance of home construction or renovations requires that certain statutory provisions as related to the lien benefits accorded to contractors, subcontractors and suppliers be modified. The Legislature further finds that the construction of residential housing generally involves numerous subcontractors and suppliers to complete one unit of housing and that the multiplicity of lien claims and potential for minor monetary disputes poses a serious impediment to the ability to transfer title to residential real estate expeditiously. The Legislature further finds that the purchase of a home is generally one of the largest expenditures that a family or person will make and that there are a multitude of other State and federal statutes and regulations, including the "New Home Warranty and Builders' Registration Act," P.L.1977, c.467 (C.46:3B-1 et seq.) and "The Planned Real Estate Development Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), which afford protection to consumers in the purchase and finance of their homes, thereby necessitating a different treatment of residential real estate as it relates to the rights of contractors, suppliers and subcontractors to place liens on residential real estate. The Legislature declares that separate provisions concerning residential construction will provide a system for balancing the competing interests of protecting consumers in the purchase of homes and the contract rights of contractors, suppliers and subcontractors to obtain payment for goods and services provided.
b. The filing of a lien for work, services, material or equipment furnished pursuant to a residential construction contract shall be subject to the following additional requirements:
(1) As a condition precedent to the filing of any lien arising under a residential construction contract, a lien claimant shall first file a Notice of Unpaid Balance and Right to File Lien in accordance with the provisions of subsection a. of section 20 of this act, and comply with all other provisions of this section.
(2) (a) Upon the filing of a Notice of Unpaid Balance and Right to File Lien, service of the Notice of Unpaid Balance and Right to File Lien shall be effected in accordance with the provisions of section 7 of [this act] P.L.1993, c.318 (C. 2A:44A-7).
(b) (i) A lien claimant shall include with the Notice of Unpaid Balance and Right to File Lien an additional notice to the person from whom an unpaid balance is claimed to be due that, if the person disputes the Notice of Unpaid Balance and Right to File Lien, the person is required to notify the lien claimant, by certified mail return receipt requested, within 10 days of the date the Notice of Unpaid Balance and Right to File Lien is served pursuant to section 7 of P.L.1993, c.318 (C.2A:44A-7);
(ii) If the person does not respond within 10 days as required pursuant to subsubparagraph (i) of this subparagraph (b), then the lien claimant shall have the right to consider that the Notice of Unpaid Balance and Right to File Lien is not in dispute and shall not be required to comply with paragraph (3) of this subsection b., but shall retain the right to file a lien claim 2for2 up 2to2 120 days 2[of the date the Notice of Unpaid Balance and Right to File Lien was filed pursuant to subsection a. of section 20 of P.L.1993, c.318 (C.2A:44A-20)] following the date the last work, services, material or equipment was provided for which payment is claimed2;
(iii) If the person from whom an unpaid balance is claimed to be due disputes the Notice of Unpaid Balance and Right to File Lien and notifies the lien claimant of the dispute as required pursuant to subsubparagraph (iv) of this subparagraph (b), the lien claimant shall comply with the provisions of paragraph (3) of this subsection b. within five 1business1 days of receipt of the response from that person;
(iv) If a person served the Notice of Unpaid Balance and Right to File Lien disputes the notice, that person shall notify the lien claimant of the dispute within 10 days of receipt of the Notice of Unpaid Balance and Right to File Lien by certified mail, return receipt requested. If the person does not notify the lien claimant as required pursuant to this subsubparagraph (iv), the Notice of Unpaid Balance and Right to File Lien shall not be further disputed by that person;
(v) A lien claimant who is paid the amount owed as stated in the Notice of Unpaid Balance and Right to File Lien shall discharge the Notice of Unpaid Balance and Right to File Lien of record within five 1business1 days of receipt of the amount owed. Failure to discharge the Notice of Unpaid Balance and Right to File Lien of record on a timely basis shall make the lien claimant liable for the costs of the owner who makes a deposit after the fifth 1business1 day pursuant to paragraph (11) of this subsection b. to comply with the requirements of that paragraph.
(3) Unless the parties have otherwise agreed in writing to an alternative dispute resolution mechanism[, simultaneously with the service under paragraph (2) of this subsection] and if the Notice of Unpaid Balance and Right to File Lien is disputed pursuant to subsubparagraph (iii) of subparagraph (b) of paragraph (2) of this subsection b. , the lien claimant shall also serve a demand for arbitration and fulfill all the requirements and procedures of the American Arbitration Association to institute an expedited proceeding before a single arbitrator designated by the American Arbitration Association.
(4) Upon the closing of all hearings in the arbitration, the arbitrator shall make the following determinations: (a) whether the Notice of Unpaid Balance and Right to File Lien was in compliance with section 20 of this act and whether service was proper under section 7 of this act and whether the lien claimant and the person claimed to owe a balance to the lien claimant are in compliance with the requirements of paragraph (2) of this subsection b.; (b) the validity and amount of any lien claim which may be filed pursuant to the Notice of Unpaid Balance and Right to File Lien; (c) the validity and amount of any liquidated or unliquidated setoffs or counterclaims to any lien claim which may be filed; and (d) the allocation of costs of the arbitration among the parties.
(5) In the event the amount of any setoffs or counterclaims presented in the arbitration are unliquidated and cannot be determined by the arbitrator in a liquidated amount, the arbitrator, as a condition precedent to the filing of the lien claim, shall order the lien claimant to post a bond, letter of credit or funds with an attorney-at-law of New Jersey, or other such person or entity as may be ordered by the arbitrator in such amount as the arbitrator shall determine to be 110% of the approximate fair and reasonable value of such setoffs or counterclaims, but in no event shall the bond, letter of credit or funds exceed the amount of the lien claim which may be filed. This 110% limitation regarding any bond, letter of credit or funds shall also apply to any alternative dispute resolution mechanism to which the parties may agree.
(6) The arbitrator shall make such determinations set forth in paragraphs (4) and (5) of this subsection within 30 days of receipt of the lien claimant's demand for arbitration by the American Arbitration Association. That time period shall not be extended unless otherwise agreed to by the parties. If an alternative dispute mechanism is alternatively agreed to between the parties, such determination shall be made as promptly as possible making due allowance for all time limits and procedures set forth in this act.
(7) Any contractor, subcontractor or supplier whose interests are affected by the filing of a Notice of Unpaid Balance and Right to File Lien under section 10 of this act shall be permitted to join in such arbitration; but the arbitrator shall not determine the rights or obligations of any such parties except to the extent those rights or obligations are affected by the lien claimant's Notice of Unpaid Balance and Right to File Lien.
(8) Upon determination by the arbitrator that there is an amount which, pursuant to a valid lien shall attach to the improvement, the lien claimant shall, within 10 days of the lien claimant's receipt of the determination, file such lien claim in accordance with the provisions of section 8 of this act and furnish any bond, letter of credit or funds required by the arbitrator's decision. The failure to file such a lien claim, or furnish the bond, letter of credit or funds, within the 10-day period, shall cause any lien claim to be invalid.
(9) Except for the arbitrator's determination itself, any such determination shall not be considered final in any legal action or proceeding, and shall not be used for purposes of collateral estoppel, res judicata, or law of the case to the extent applicable. Any finding of the arbitrator pursuant to the provisions of this act shall not be admissible for any purpose in any other action or proceeding.
(10) If either the lien claimant or the owner is aggrieved by the arbitrator's determination, then either party may institute a summary action in the Superior Court, Law Division, for the vacation, modification or correction of the arbitrator's determination. The arbitrator's determination shall be confirmed unless it is vacated, modified or corrected by the court. The court shall render its decision after giving due regard to the time limits and procedures set forth in this act. The time period for filing a lien claim under P.L.1993, c.318 (C.2A:44A-1 et seq.) shall be tolled until the court renders its decision.
(11) In the event a Notice of Unpaid Balance and Right to File Lien is filed and the owner conveys its interest in real property to another person before a lien claim is filed, then prior to or at the time of conveyance, the owner may make a deposit with the county clerk where the improvement is located, in an amount no less than the amount set forth in the Notice of Unpaid Balance and Right to File Lien. For any deposit made with the county clerk, the county clerk shall discharge the Notice of Unpaid Balance and Right to File Lien or any related lien claim against the real property for which the deposit has been made. After the issuance of the arbitrator's determination set forth in paragraphs (4) and (5) of this subsection, any amount in excess of that determined by the arbitrator to be the amount of a valid lien claim shall be returned forthwith to the owner who has made the deposit. The balance shall remain where deposited unless the lien claim has been otherwise paid, satisfied by the parties, forfeited by the claimant, invalidated pursuant to paragraph (8) of this subsection or discharged under section 33 of this act. Notice shall be given by the owner in writing to the lien claimant within five 1business1 days of making the deposit.
(12) Solely for those lien claims arising from a residential construction contract, if a Notice of Unpaid Balance and Right to File Lien is determined to be without basis, the amount of the Notice of Unpaid Balance and Right to File Lien is significantly overstated, or the Notice of Unpaid Balance and Right to File Lien is not filed in substantially the form, or in the manner, or at a time not in accordance with the provisions of this act, then the claimant shall be liable for all damages suffered by the owner or any other party adversely affected by the Notice of Unpaid Balance and Right to File Lien, including all court costs, reasonable attorneys' fees and legal expenses incurred.
(13) If the aggregate sum of all lien claims attaching to any real property that is the subject of a residential construction contract exceeds the amount due under a residential purchase agreement, less the amount due under any previously recorded mortgages or liens other than construction liens, then upon entry of judgment of all such lien claims, each lien claim shall be reduced pro rata. Each lien claimant's share then due shall be equal to the monetary amount of the lien claim multiplied by a fraction in which the denominator is the total monetary amount of all valid claims on the owner's interest in real property against which judgment has been entered, and the numerator is the amount of each particular lien claim for which judgment has been entered. The amount due under the residential purchase agreement shall be the net proceeds of the amount paid less previously recorded mortgages and liens other than construction liens and any required recording fees.
(cf: P.L.1993, c.318, s.21)
5. This act shall take effect on the 1[90th day after] first day of the fourth month next following1 enactment and shall apply to all residential construction contracts entered into on and after the effective date of the act.