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We are a contractor who was not paid by a GC. Question

New JerseyLien ReleasesMechanics Lien

We are a sub contractor who was not paid by a GC. We liened the property. That was 4 hrs ago. Now that homeowner wants to sell the property and they got a lawyer to ask us to remove it. They claim they paid the GC Do we have any rights here? We are in NJ

1 reply

Jan 3, 2019
That's a fair question. First - I'll assume that was a typo you filed the lien 4 years ago and not 4 hours ago! :) Before discussing what's owed, it's important to look at the New Jersey lien deadline - specifically, the deadline by which a claimant must enforce their lien claim. In New Jersey, after a lien claim is filed, that claimant must "enforce" their lien (via lawsuit) within 1 year of filing their lien. If an enforcement suit is not filed within that year, the claimant's lien will expire and some other method of recovery will be more appropriate. Further, looking to the amount owed, when a prime contractor has received full payment in New Jersey, a sub-tier lien claimant will have a hard time recovering payment via a lien against the property. New Jersey is what's called an "Unpaid Balance" state. This means that a lien claimant is entitled to file a lien for amounts owed and unpaid, but the amount of the lien is capped at the amount that the owner hasn't paid their prime contractor. So, in a situation where that prime contractor is fully paid, a sub-tier claimant might not have a lien available. Finally, it's worth mentioning that when a lien is holding up the sale of a property - it's at its strongest. Inhibiting the sale of property is one of the most powerful traits of a mechanics lien. Even where a lien is invalid and unenforceable, a claimant might be able to leverage the release of the lien for partial payment. Of course, pushing too hard could have negative effects here, and potentially, a lien claimant could face penalties for failure to release an expired lien. While it appears that the New Jersey lien statute merely contemplates that claimants must release their lien upon payment (rather than upon expiration), that doesn't necessarily mean a claimant shouldn't release an expired lien. For more background on New Jersey liens, this resource should be useful: New Jersey Lien & Notice FAQs.
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