Home>Levelset Community>Legal Help>Isn't a private developer potentially "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"? Couldn't it be interpreted that a property designated for resale and technically currently owned by "the City of Newark" be holder of the lien? If I place a lien on a property that is owned by a government entity, what happens? Will they attempt to throw it out?

Isn't a private developer potentially "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"? Couldn't it be interpreted that a property designated for resale and technically currently owned by "the City of Newark" be holder of the lien? If I place a lien on a property that is owned by a government entity, what happens? Will they attempt to throw it out?

New JerseyRight to Lien

I asked: Can a lien be placed on someone who has purchase rights/transfer rights to a property for development? You replied: "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. " However, the project is NOT a public project. It is currently already committed to be purchased by private sale, via a resolution already approved by the city. It is not a PUBLIC PROJECT it is simply a City-owned property that is now being sold/transferred/deeded to the developer who hired us for architectural services and who hired us for the site planning zoning submission which was approved for development (under my NJ architectural license). So in this case, can I put a lien on the private interests of the developer via the property, which he now and soon will be the owner of?

1 reply

Jul 19, 2018

This is an interesting question. There are a couple of facets to take a look at:

1. To the extent that a project was "contracted for and awarded by a public entity" New Jersey statute § 2A: 44A-5 specifically prohibits the filing and attachment of a mechanics lien claim. Whether any potential contractual right to acquire the property is sufficient to meet the definition of "owner" for the purposes of mechanics lien rights is inapplicable.

2. To the extent that the developer was the party that contracted for the improvement to the property (with some 3rd party subs or in some capacity as an owner-developer) the question can be examined. It is unlikely that the developer was the party contracting for the improvement to the property if the property was still currently city-owned, but if they were, the argument may have some potential. In that case, any potential lien attempted to be filed could not attach to the property, but would be limited to attach to the interest of the "owner" contracting party (here, presumably, the right to purchase the property), and would not attach to the property itself.

It is probably unlikely that this would be successful. However, if there was no payment bond required and obtained for the project it may potentially be worth a shot.

Also, note that the deadline for a subcontractor to file a mechanics lien in New Jersey is 90 days from last providing labor and/or material to the project. If the property changed hands and was privately owned within that time period the same bar to filing the lien may not apply.

0 people found this helpful

Helpful