From time to time, we receive questions from clients asking to file construction liens in relation to public construction projects. In New Jersey, a contractor or subcontractor cannot file a lien against a public entity under New Jersey’s Construction Lien Law. However, a contractor or subcontractor can file a lien against counties, municipalities and other public entities under the Municipal Mechanics’ Lien Law. N.J.S.A. 2A:44-125, et seq. This post will explore various questions pertaining to the filing and enforcement of Municipal Mechanics’ Lien in New Jersey.
A Municipal Mechanics’ Lien can be filed against any “public agency.” The Municipal Mechanics’ Lien Law defines “public agency” as any county, city, town, township, public commission, public board or other municipality. N.J.S.A. 2A:44-126. A Municipal Mechanics’ Lien cannot be filed against the State of New Jersey.
Any subcontractor or contractor that performs any labor or supplies any materials for the performance or completion of a public improvement under a contract with a public agency can file a Municipal Mechanics’ Lien against the public agency. N.J.S.A. 2A:44-128(a).
A subsubcontractor or a supplier of materials to a subcontractor may also file a Municipal Mechanics’ Lien if they satisfy an additional requirement. Within 20 days of the first performance of work or delivery of materials or labor to a subcontractor, a subsubcontractor must file a written notice with the contracting public agency stating that the subsubcontractor has supplied labor materials to the subcontractor. N.J.S.A. 2A:44-128(b). The notice must be filed with the municipal clerk, chief financial officer of the county or chairman of the commission, board or authority, whichever is appropriate depending upon the type of the contracting public agency. The notice must include various other information required by the Municipal Mechanics’ Lien Law.
If a subsubcontractor or a supplier of materials to a subcontractor fails to file the written notice within 20 days of the first delivery of materials or performance of work, they are generally barred from filing a Municipal Mechanics’ Lien. N.J.S.A. 2A:44-128(b). However, a Municipal Mechanics’ Lien can still be valid if the notice is filed after the 20 days if, at the time the written notice is actually filed, there is money owed from the contractor to the subcontractor to whom the labor or materials were provided. In this situation, the maximum amount protected by the lien is the amount of money still owed by the contractor to the subcontractor.
A notice of Municipal Mechanics’ Lien must be filed within 60 days of the completion of work by the contractor or the acceptance of that work by resolution of the contracting public agency. N.J.S.A. 2A:44-132.
The notice of Municipal Mechanics’ Lien must be timely filed with the appropriate clerk, secretary, chairman or other head of agency depending on the type of the contracting public agency. N.J.S.A. 2A:44-132. The notice must include:
a) the name and address of the person or entity claiming a lien,
b) the amount owed,
c) the name of the person or entity that owes the claimant,
d) the name of the person or entity who contracted with the claimant for supply of materials or labor,
e) the nature of the public improvement or contract,
f) the names of the public agency and other party to the contract for the public improvement,
g) a specification of the type of labor or materials supplied and a statement that the labor or materials were actually used in performing or completing the contract with the public agency.
N.J.S.A. 2A:44-133. Subsubcontractors and suppliers of subcontractors are also subject to the 20 day notice requirement and the lone exception thereto described above.
A validly filed lien requires the public agency or municipality to hold money in its control that is due, or that will become due under the contract, to the full value of the amount claimed by the lien. N.J.S.A. 2A:44-128(a). The municipality or other public agency is obligated to hold the money for the purpose of paying the full amount of the lien to the lien claimant in accordance with the provisions of the Municipal Mechanics’ Lien Law. At the same time, no town or other public agency will be required to pay a greater amount than the contract price of the labor performed and materials furnished. N.J.S.A. 2A:44-128(a)
After the Municipal Mechanics’ Lien is filed, the public agency may, but is not required to, notify the general contractor or other parties with an interest in the funds subject to the lien. N.J.S.A. 2A:44-135. If this occurs, the interested parties have 5 days to file papers with the public agency explaining why the lien claim should not be paid. If no such explanation is timely filed, the public agency may proceed to pay the lien claim. N.J.S.A. 2A:44-136. The amount paid is credited to the amount of the contract.
If the town or public agency does not pay the claim, the filer of a valid Municipal Mechanics’ Lien may enforce the claim by filing a lawsuit in the Superior Court of New Jersey. N.J.S.A. 2A:44-137. Such a lawsuit must be filed within 60 days of the time the work is completed or accepted by resolution of the public agency. N.J.S.A. 2A:44-138. If successful, a lien claimant may obtain a judgment ordering the public agency to release the lien funds to the claimant. N.J.S.A. 2A:44-140.
Our firm devotes a significant amount of its practice to New Jersey construction law and litigation. As part of this practice, we file and prosecute Municipal Mechanics’ Lien claims. We welcome you to contact us for further information if you have a payment dispute on a construction project.
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