CAI-NJ June 2018 (w)

“The contractor can only record an actual construction lien after an arbitrator allows it.”

CONTRACTORS... from page 32.

can only record an actual construc- tion lien after an arbitrator allows it. Failure by the contractor to comply with this prerequisite will strip the contractor of the ability to obtain a valid construction lien. Despite these requirements, con-

includes multi-family community association developments 2 ), the procedural requirements a contractor must follow to record a valid lien are very strict and time sensitive. It is common for smaller, local contractors to

attempt to obtain construction liens with- out the assistance of an attorney. When a contractor proceeds without counsel, it is often the case that the contractor does not comply with the statutory requirements. For instance, before a lien on residential property can be recorded, the contractor must first record a Notice of Unpaid Balance (“NUB”) no later than 60 days after the last finished work and request a special arbi- tration procedure through the American Arbitration Association. The association

tractors often record an actual construction lien in the County Clerk’s office where the property is located. When this hap- pens, the lien is invalid. If a contractor refuses to discharge an invalid lien voluntarily, and the association must hire an attorney to petition the court for removal of the lien, the con- tractor can be liable not only for any consequential damages to the association (such as slander of title) but also for the association’s legal fees. Consumer Fraud Act and Home Improvement Practice Regulations As with construction liens for residential projects, there are also elevated requirements under the New Jersey Consumer Fraud Act (“CFA”) 3 and the Home Improvement Practice CONT I NU E S ON PAGE 36

must be served with the NUB and arbitration notice and given the opportunity to object to the lien amount. The contractor

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