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Foreclosure in a Bonded lien

We filed a lien on a project we are not getting paid o. The owner required the contractor we work for to get a bond We would like to collect or foreclose against that bond as quickly possible. Our lien is less than 60 days o the bond w processed lasteek

1 reply

Jun 13, 2019

I'm sorry to hear you've been having to battle for payment, but I'm glad to hear that your payment claim hasn't gone ignored. Let's look at New Jersey's lien statute and discuss what happens when a lien is bonded off.

When a New Jersey mechanics lien is bonded off, a lien claimant will still pursue their claim much in the same way they would have if the lien had remained intact. Just like when a mechanics lien is left intact, a bonded off lien claim must be "enforced", and the deadline to do so remains the same. So, really, the only difference is that when a foreclosure suit is brought, the surety bond replaces the project property. Rather than the potential for recovery coming from the sale of the property itself (if things came down to a foreclosure), payment would come from the bond itself. So, in some sense, having a bonded off lien might be beneficial - at the very least, money exists (via the bond) to make payment on the claim if a lien claimant is successful.

As a reminder - in New Jersey, the deadline to enforce a filed lien is generally 1 year from the time that labor and/or materials were last furnished. Of course, this time frame can be shortened to a mere 30 days if the lien claimant receives written notice from the property owner or some other interested party (like the prime contractor) requiring the claimant to enforce their lien. So, a lien enforcement action taken against the payment bond should generally follow this same timeframe.

Finally, it's worth noting that when a lien claim has been filed but payment still hasn't been made, threatening to enforce the payment claim could help speed up payment. Typically, this might be done via a Notice of Intent to Foreclose document - but, when a lien is bonded off, threatening to enforce a claim against the bond (rather than against the project property) would likely be more appropriate and effective.

If it seems like a lawsuit is imminent or unavoidable to pursue the claim, it'd be wise to reach out to a local construction attorney sooner than later. They'll be able to assess the situation and help you take the necessary steps toward enforcing the claim. Plus, an enforcement action typically requires an attorney anyway.

For more information on New Jersey lien claims, this resource will be helpful: New Jersey Lien and Notice Overview, FAQs, and Statutes.

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