Mechanics lien laws are often strictly construed. If the form, amount, or timing is off even by a little, a lien claim could be tossed aside. Another key consideration is how notice is sent. A recent New Jersey case put this on full display. Notice of filing was sent to location where work was done, but the lien was discharged – it should have gone to the corporation’s registered agent instead.
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New Jersey Lien Law
Filing a New Jersey lien can be tricky. Residential liens have a convoluted process, and because of the state’s unique laws, claimants should take extra care when a bankruptcy filing is involved. We’ve actually got an entire post on key New Jersey lien law considerations, so give our 5 Things to Know post a read.
Service to Corporations
In New Jersey, like many states, notice must be sent to the owner when a lien claim is filed. However, it’s important to make sure it’s sent to the right address. On many projects, the property where the project was located will be the correct address. Residential owners will often live in the property where work was done, and for commercial projects, the owner’s address will often be the location where work was done as well. However, when property (residential or commercial) is owned by a corporation, extra precaution should be taken. In fact, corporations have registered agents who are specifically designated for situations like this.
In a recent unpublished opinion, Santander Condominium Association, Inc. v. AA Construction, a subcontractor did not take enough precaution. AA Construction filed a lien against Santander after AA went unpaid for work done. However, when the lien was filed, AA sent notice to the address where work was performed. As mentioned above, this is often no big deal. However, because Santander Condominium Association, Inc. owned the property, the corporation had to be sent notice. The corporation was not located at the property where work was performed.
At trial, AA argued that because it was a subcontractor on the project, AA had no way of knowing Santander’s true address. The proper address was included in the contract between Santander and the GC, but AA did not have access to that information. However, as Santander argued, the address could have easily been found – a corporate search would have shown that Santander’s registered agent was not even located in the same town where work was done. The court agreed, and the claim was discharged.
Check out our FAQ on New Jersey’s lien and notice requirements.
Sending proper notice is often the trickiest part of filing a lien claim. Each state has different requirements, and requirements may even change within the same state depending on the claimant or the project type. When a corporation is involved, another variable could be thrown into the mix, just as it was in this case. Honestly, this is pretty tough on claimants. Even without decisions like this, the complexity of lien laws can feel like a minefield on the road to recovery. This was an individual, unpublished case though- so don’t panic. Even within the state of New Jersey, this case is not binding precedent. However, it should put you on alert when a corporation is involved.