The Lawsuit Demand: An Owner’s Aggressive Response to Construction Liens

February 19, 2015Articles Garden State Gavel Blog

New Jersey Construction Lien Law states in pertinent part that a claimant “who provides work, services, material or equipment pursuant to a contract, shall be entitled to a lien for the value of the work or services performed, or materials or equipment furnished in accordance with the contract and based upon the contract price...” N.J.S.A. 2A:44A-3.

There are many ways for owners to respond to construction liens. One response that may be appropriate for owners represented by counsel where the construction lien is unwarranted is to challenge the claimant to file a lawsuit to enforce the lien. If the claimant files suit, the lien can be promptly litigated. If the claimant does not file suit within thirty (30) days, the lien will likely be forfeited and discharged.

To take advantage of this procedure, an owner can first serve written notice pursuant to N.J.S.A. 2A:44A-14(a)(2) (the “Notice”) requiring the claimant to commence an action to enforce the lien within thirty (30) days following receipt of the Notice. If the claimant fails to commence an action to enforce the lien within thirty (30) days following receipt of the Notice, the lien will likely be forfeited.

Thereafter, an owner can demand that the claimant discharge the forfeited lien within seven (7) days per N.J.S.A. 2A:44A-30. If the claimant fails to discharge the forfeited lien and the owner is forced to file suit to have the lien discharged, the owner will likely be entitled to a judgment discharging the lien and awarding damages, including attorneys’ fees and costs.