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Clerification

New Jersey

On public projects in New Jersey, there are two potential types of protection: a claim against a contractor’s bond, and a lien claim against the contract funds. As against the contractor’s bond, the parties entitled to make a claim are 1st and 2nd tier subcontractors and material suppliers (suppliers to suppliers are not entitled to protection. As against the contract funds, the parties entitled to file a lien are 1st and 2nd tier subcontractors, or suppliers to the general contractor or 1st or 2nd tier subcontractors. Note, however, that this remedy is not allowed for public projects involving the state or state agencies – it is only allowable when the contracting public agency is “county, city, town, township, public commission, public board or other municipality.” Can you clarify this for me? Also, do you have to hire an attorney to file a lien on the contract or is this something that Level set will be able to do? Thanks.

2 replies

May 20, 2020
Sure thing! Let's break these down individually to see who is entitled to these payment remedies on public works projects in New Jersey.

Payment bond claims coverage

Under New Jersey's Little Miller Act, all public works projects require a payment bond to be issued. Those who can make a claim against the payment bond are limited to 2 levels of the contracting chain. Anyone who contracted directly with the GC, and anyone who contracted with a direct subcontractor can make a claim. In other words, if you were hired by the GC, or hired by someone hired by the GC (sub-subcontractors or suppliers to a subcontractor), then you are entitled to make a bond claim in New Jersey. Suppliers to suppliers are not entitled.

Liens against contract funds coverage

This is an alternative payment remedy on public works projects in New Jersey. However, this remedy is unavailable on state or state agency projects. Those who can file a lien claim against the contract funds include direct contractors, subcontractors, sub-subcontractors, or anyone who supplies labor or materials to any of these parties. Again, suppliers to suppliers are not protected. So, compared to bond claims, liens on contract funds also protect direct contractors and one-tier down the contracting chain. Lastly, you do not need an attorney to file these claims. Levelset can take care of all of this. Just head over to our Payment Rights Advisor to see how we can help.
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Oct 16, 2022

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