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Can a lien be placed on someone who has purchase rights/transfer rights to a property for development?

New Jersey

The Zlien NJ info defines an Owner as: “Owner” means any person, including any public or governmental entity, who has an interest in the real property to be improved and who has contracted with a prime contractor for such improvement to be made. “Owner” shall be deemed to include any successor in interest or agent acting on behalf of an owner. We have , as architects, been hired by a developer who has a signed resolution/agreement from the city to purchase property on which we have done extensive work, including site plan submission for zoning planning board application to obtain successful approvals for the development of the property. If we place a lien, the current official property owner on record is the City, since the developer has not yet executed the purchase of the property. However, it seems, as defined above, that the developer would still be considered as "successor in interest or agent acting on behalf of an owner". In this situation, can we still place the lien on the property? We have proof and record of the transfer rights contract.

1 reply

Jul 18, 2018

That's a great question. It's worth noting that the definition you're referring to comes from the New Jersey prompt payment statute (specifically 2A:30A-1) - not the New Jersey mechanics lien statute. The New Jersey mechanics lien statute defines an "owner" differently, and that statute is the one that will be binding when it comes to mechanics lien rights. Under § 2A: 44A-2 of the mechanics lien statute, an “owner” or “owner of real property” refers to "any person, including a tenant, with an interest in real property who personally or through an authorized agent enters into a contract for improvement of the real property." A few lines down, the statute defines "Public Entity" separately and does not include that term within the definition of an "owner". Thus, it's probably safe to assume that for the purposes of filing a mechanics lien, a public entity will not be considered an owner of lienable property under New Jersey statute. Further, under § 2A: 44A-5 of the New Jersey lien statute, titled "Prohibited Liens and Claims", the statute states "No liens shall attach nor shall a lien claim be filed...b. For public works or improvements to real property contracted for and awarded by a public entity..." Thus, it would appear that while project property is publicly owned, a mechanics lien filing on that property would likely not be valid or appropriate. Of course, there are other options for recovery. Also, if a developer has posted a payment bond for the project (as many municipalities require with development contracts), a claim against that bond can be particularly effective.

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