A lien is a claim, interest, or right to property or a portion of it, of another person, arising by law or agreement for payment of a debt or liability. A mechanics' lien is a lien in real estate held by a person for labor, service, or materials furnished in connection with the construction or improvement of real estate. This type of lien is codified by the statute of the state which governs the creation, extent, filing, and foreclosure of the lien. The time limitations for filing of the lien and foreclosure of it are set by statute. For most states, the lien must be verified or sworn under oath and must include the names and addresses of the lien claimant, the owner of the real estate and/or his/her agent, the street address and legal description of the real estate subject to the li...
Mechanics Lien
The Mechanics Lien Act (the 'Act') is a very technical act. A properly perfected claim for mechanics lien may take priority over the interest of the trustee. On the other hand, if the contractor or subcontractor fails to comply with the requirements of the Mechanics Lien Act, its lien claim against the owner's property is unperfected and would not stand up against the claim of a bona fide purchaser of any real property allegedly subject to the unperfected mechanics lien. Thus, if the owner filed bankruptcy, an unperfected mechanic's lien claim would fall to a trustee's exercise of his strongarm powers under §544(a) of the Bankruptcy Code. The intersection of bankruptcy and mechanics lien law creates a trap for the unwary. It is imperative that the lien claimant continue to perfect its c...
Priority of Mechanics Lien
New Jersey's Construction Lien Law (CLL) offers statutory protection to contractors, subcontractors or suppliers who provide "work, services, material or equipment," pursuant to a written contract, in connection with the "improvement" or repair of private realty. The CLL allows contractors, subcontractors, and suppliers who are not compensated for their work to place liens on real property improved by their efforts, for the contract price of the work performed, or the unpaid portion thereof. The lien serves as security for the unpaid debt. Generally, no party against whom a lien claim is asserted, including owners, will be forced to pay twice for work provided, services rendered, or materials provided under the CLL. Under the Mechanics' Lien Law, owners and general contractors were prov...
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