Procedural requirements regularly put mechanics liens in jeopardy. Specifically, missed deadlines often lead to dead liens. Because courts strictly adhere to statutory requirements, it is important to understand exactly what those requirements are. Whether you’re looking for a mechanics lien deadline or information on what work is lienable in your state, we’ve got you covered on our Mechanics Lien FAQs.
One of the more frequent procedural issues that pops up is determining the last date where work or materials was provided. This is often referred to as a date of final furnishing. Depending on the role a contractor, sub, or supplier has in a project, different actions can extend this time frame. Generally, the last date that a party provides labor or materials in a manner consistent with their contract serves as the date of final furnishing. In a recent New Jersey case, a material supplier miscalculated the last date on which work was provided, resulting in dismissal of the lien.
WJV Materials (WJV) was contracted to supply concrete by a subcontractor of Erin Contracting (Erin), the general contractor. After Erin failed to pay for over $50K in materials and services, WJV timely filed a mechanics lien. On the face of the lien, the supplier claimed the last day work was performed on the site was April 16, 2013. According the WJV, this was merely a typo and the last day work was provided was actually May 16 of that year. On May 2, 2014, just over a year later, WJV filed to foreclose the lien.
According to New Jersey law, a claimant has 90 days from the date that it last furnished labor or materials on the project. WJV adhered to this deadline, which resulted in a valid mechanics lien. However, in New Jersey, a lien must be enforced within one year of the date of final furnishing. Because the date of final furnishing on the face of the lien was April 16, 2013 and the enforcement action was filed on May 2 of 2014, the lien was not enforced in a timely manner, properly resulting in the dismissal of the lien.
But what about that typo?
WJV claimed that the April 16 date provided on the face of the lien was a mere typographical error, and that the true date of final furnishing was May 16, 2013. On that date in 2013, a supervisor from WJV inspected the work that WJV had completed a month before. At court, WJV claimed that this inspection extended the mechanics lien deadline, meaning the May 2, 2014 filing was done in timely fashion.
The general contractor claimed that no such extension should take place. According to Erin, the inspection was not mentioned in the contract. In actuality, the inspection came as a surprise to the subcontractor who had hired WJV to supply concrete for the project. The court agreed with Erin, dismissing WJV’s action to enforce the mechanics lien. Because the action to enforce the lien was filed several weeks late, WJV was no longer entitled to its mechanics lien on the property.
A mechanics lien deadline has claimed yet another victim. Contractors, subs, and suppliers should note that if they are providing work or materials, it should be specified under contract. Clearly, work not specified or contemplated in the contract will not be considered when calculating the final date work was provided. Had an inspection been contemplated in the contract, it very well could have postponed the date of final completion.
Knowing what determines substantial completion is a key part of understanding a state’s lien laws. Filing a mechanics lien is already a convoluted process, especially in New Jersey, so complicating things by misinterpreting deadlines can only end in disaster. Understanding lien laws is a pivotal step in protecting the right to payment, and knowing them before an incident occurs can prevent payment issues from derailing a business.