Is It Legal To Waive Municipal Mechanic’s Lien Rights in New Jersey? - Construction Lawyers

Is It Legal to Waive Municipal Mechanic's Lien Rights in New Jersey?

It is not uncommon for owners or general contractors to require contractors or subcontractors to sign agreements providing for the contractors’ giving up or waiving their right to file liens. In New Jersey, the legality of such a provision differs depending upon whether the job is a public or private job. In New Jersey, the right to file a construction lien on a private job may not be effectively waived unless the waiver is made in exchange for payment to the contractor for work performed or materials supplied to the project. In contrast, there is no statute or case that prohibits a contractor from waiving his or her right to file a municipal mechanic’s lien on a public job.

Waiver Under the Construction Lien Law

The Construction Lien Law is straightforward on this issue with respect to private jobs:

Waivers of construction lien rights are against public policy, unlawful, and void, unless given in consideration for payment for the work, services, materials or equipment provided or to be provided, and such waivers shall be effective only upon and to the extent that such payment is actually received.

N.J.S.A. 2A:44A-38.

Waiver Under the Municipal Mechanic's Lien Law

By contrast, the New Jersey’s Municipal Mechanic’s Lien Law contains no similar provision that directly addresses waiver. Review of the relevant case law is not particularly helpful either, as it predates New Jersey’s modern statutory scheme with respect to liens. Nonetheless, the dated case law does recognize the legality of a waiving the right to file a municipal mechanic’s lien. See Charles Simkin & Sons, Inc. v. Massiah, 289 F.2d 26 (3rd Cir. 1961)(citing Mitchell v. Wrightstown Community Apartments, Inc., 4 N.J. Super. 321 (App. Div. 1949)). On the other hand, the Simkin decision is a federal case, which relies on New Jersey case law enforcing the waiver of lien rights with respect to liens on private jobs prior to the revision of the Construction Lien Law to expressly prohibit such waiver. There is thus good reason to question the validity of the Simkin decision today. At the same time, principles of statutory interpretation suggest that, given the explicit prohibition on waiving lien rights on private jobs under the Construction Lien Law, the absence of any such prohibition in the Municipal Mechanic’s Lien Law would not be construed as an inadvertent oversight.

While there is an explicit statutory prohibition in New Jersey on the waiver of lien rights on private projects, there is no such prohibition on the waiver of municipal mechanic’s lien rights on public jobs. There is also no statute or case law suggesting that the prohibition on waiver in the Construction Lien law applies to municipal mechanic's liens on public projects in New Jersey. Accordingly, although the law is unclear on this issue, there is good reason to suspect a contractual provision providing for the waiver of the right to file a municipal mechanic’s lien would be deemed enforceable by a New Jersey court.

New Jersey Construction Lawyers

The Law Office of Bart J. Klein devotes a significant amount of its practice to New Jersey construction law and litigation, including construction liens and municipal mechanic's liens. We welcome you to contact us for further information.