Why Construction Liens Are An Effective Way to Get Paid
Construction Liens Can Be Used to Force the Sale of Real Estate
Many contractors and people working in the construction industry are generally aware of construction liens. They know that construction liens can be used to help you get paid for work that has been completed. At the same time, many do not understand why. The short answer is that, at the end of the day, a construction lien can be used to force the sale of the real estate on which a construction project is located. The proceeds from the forced sale may be used to pay the person or entity who filed the construction lien.
The Process From Construction Lien Filing to Judgment
The mere prospect of the possible forced sale, and the potential for other problems that the lien can cause, like preventing the owner’s sale of the property or the use of the property as collateral for a loan, often results in payment to discharge the construction lien. On the other hand, if an owner, general contractor or subcontractor refuses to make payment upon the filing of a construction lien, getting to the point where a sale of the real estate can be forced is a long and drawn out process. Not only must a construction lien be filed, but a lawsuit must also be filed and a judgment must be obtained.
Only when a court enters a judgment based upon a construction lien can you force the sale of the real estate that the construction project is on. The New Jersey Construction Lien Law provides:
The judgment to be entered in a suit to enforce a lien claim shall (1) establish the amount due to the lien claimant; and (2) direct the public sale by the sheriff or other such officer as the court may direct of the real property and improvement affected by the lien. . . .
N.J.S.A. 2A:44A-24.1(f). Thus, if you can prevail in a lawsuit based upon a validly construction lien, you can force the sale of the real estate.
The Possibility of Forced Sale Creates an Incentive to Settle
With the possible outcome of a sale of real estate looming in the background, it is rare that a construction lien claim actually reaches the point where a judge directs the sale of real estate. In most cases, a settlement is negotiated between the interested parties. As attorneys who regularly deal with construction lien claims, we are prepared to proceed regardless.
New Jersey Construction Lawyers
The construction lawyers of Law Office of Bart J. Klein devote a significant amount of their practice to New Jersey construction law and litigation, including construction liens. We welcome you to contact us for further information.
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