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liens in NJ

we are a manufacturer and supplier of windows. if we custom-make windows for a project in New Jersey, and then our customer refuses acceptance of the windows upon delivery, are we allowed to lien the project? even if the materials were not provided? they were custom-made for the project. please advise.

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Dec 5, 2019

Mechanics lien rights for specialty materials suppliers can get complex. Where the materials are furnished to the project and actually incorporated into the site - there's little doubt that the materials will give rise to mechanics lien rights. However, when those materials don't make it into the project property for one reason or another, mechanics lien rights might not be available. While unfortunate, this makes sense - lien rights generally hold the owner accountable for improvements to their property that aren't paid for. And, if specialty materials don't actually make their way into the project, then the property hasn't been improved. Because specialty materials can't always be reused on other jobs, this puts parties who manufacture or fabricate specialty materials in a bind. Ordinary material suppliers can typically simply resell or reuse materials on a different job - but those who manufacture materials for a specific job might not have that same luxury.

New Jersey specialty materials manufacturers and mechanics lien rights

Some states provide specific lien protection for those suppliers who make materials specially for a job - entitling them to lien rights even where the materials aren't used on the job. However, the New Jersey mechanics lien statute doesn't appear to provide this leeway. Unfortunately, nothing in the statute seems to indicate materials that don't make their way to the job site may be lienable - even if the materials were specially made for that particular construction job. At the same time, the statute doesn't appear to specifically block lien rights in such a situation either. And, if a supplier attempts to deliver these materials to the job, as order, and is refused - they may have a an argument that they should be entitled to lien rights. For more on New Jersey mechanics liens: New Jersey Mechanics Lien Guide and FAQs

Recovery options other than filing a mechanics lien

While it's not cut and dry whether or not lien rights will be available, there are some additional recovery steps that can help before things even get to the point where filing a lien would be necessary.

Invoice reminders

If there isn't a full-blown payment dispute at hand, then something as simple as a reminder might be enough to get paid. Sending an invoice reminder can be a nice nudge in the right direction and push a customer to do the right thing and pay what's owed. Granted, if they're refusing the delivery of materials, they might be pretty reluctant to make payment.

Demand letters

Escalating things a bit with a payment demand letter can be helpful, too. A strong demand letter will typically include specific legal threats and set a deadline for making payment. And, because a demand letter shows the claimant means business, it can help to get paid without further action being needed.

Notice of Intent to Lien

Threatening to pursue a mechanics lien claim can be very effective, and it can put additional pressure on a customer by informing the property owner of the payment dispute and the potential for a mechanics lien claim. So, sending a Notice of Intent to Lien can be a powerful warning shot and can work to force payment - or at least get negotiations moving. Considering the drastic nature of mechanics liens, most contractors and owners must take the threat of a lien claim seriously. More on that here: What Is a Notice of Intent to Lien and Should You Send One?

Legal recovery options

Finally, note that regardless of whether a lien claim might be the right payment recovery tool, pursuing legal action - such as a breach of contract action or an action under New Jersey's prompt payment laws - could lead to payment. And, much like with a lien claim, the threat of legal action can work to get paid, too. Naturally, though, it's a good idea to consult with a local construction attorney before deciding to proceed with legal claims.

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