In the state of New Jersey, liens filed on private property are known as mechanics’ liens . When a New Jersey mechanics lien is filed with regard to work performed on privately owned property, it attaches to and encumbers the fee simple ownership of property. When a New Jersey mechanics lien is filed on a public project, the lien attaches to and secures the funds in the public owner’s hands, prohibiting the owner from releasing that money until the mechanics lien is satisfied.
Contractors, subcontractors, sub-subcontractors, architects, engineers, and suppliers all have lien rights under New Jersey’s Construction Lien Law.
Pre-lien notice requirements exist for some lien claimants. Anyone that does not have a direct contract with the owner should file a Notice of Delivery of Materials and Services with the Owner and Prime Contractor within 20 days of starting work on the Project
New Jersey has different rules for different types of projects.
Construction Liens filed on commercial projects must be filed within 90 days after last day the claimant provided materials or labor to the Project. The filing of a Residential Lien Claim is a two step process. BOTH STEPS MUST BE COMPLETED WITHIN 120 DAYS. Within 60 days of the last furnishing of labor or materials, a lien claimant must file a Notice of Unpaid Balance along with a demand for arbitration. This arbitration has nothing to do with the litigation or resolution of the lien claimant’s underlying claim. It is solely for the purpose of determining whether the lien claimant has the right to file a lien claim. At the conclusion of the arbitration, the lien claimant may file a Construction Lien Claim for the sum of money determined by the arbitrator. Liens on public projects, also known as municipal mechanics’ liens , must be filed within 60 days of when the entire project is completed and accepted by resolution of the public agency. This differs from commercial and residential liens, which have time requirements starting when the work of the claimant, not the project, is completed.
In New Jersey, liens on public projects do not require written contracts. Commercial and Residential Project Liens can only be filed pursuant to a written agreement. This includes claims for change order work. Written agreements do not necessarily have to take the form of traditional contracts signed by both parties. For example, delivery tickets are sufficient. In New Jersey, a writing evidencing the existence of an agreement is sufficient to allow the filing of a New Jersey mechanics lien claim.
For more information about NJ Mechanic Liens, please visit LienItNow.
In Florida, liens filed on private property or on funds relating to a public project are known as Mechanic’s Liens. When a Florida Mechanics Lien is filed with regard to work performed on privately owned property, it attaches to and encumbers the fee simple ownership of property.
Contractors, as well as subcontractors, laborers, certain design professionals, sub-subcontractors and material suppliers can file a Florida mechanics lien. If a company supplies material to a material supplier, they are not eligible to file a Florida construction lien claim. Only those who have a direct contract with the owner can file a Florida mechanics lien if the total price for the improvement is $2,500.00 or less.
Depending on the claimant’s status, a Florida pre-lien notice may be required. Subcontractors and sub-subcontractors, including materialmen and suppliers who do not have a contract with the owner, are required to provide a Notice to Owner within the earliest of the following periods: within 45 days of commencing work or providing services for the Project or before the date of the owner’s final payment to the contractor who furnished an affidavit stating that all potential lien claimants have been paid.
A Florida claim of lien must be filed within 90 days of the last work performed on the project.
To learn more information about filing a Florida Mechanics Lien, please visit LienItNow.
Many construction companies are not aware that there are lawyers that specialize in construction and business development for construction companies. When choosing a lawyer, many often go for the general practitioner that may not know a hammer from a mallet. An excellent article written by Eugene H. Heady explores this issue and makes a powerful case for finding a lawyer that specializes in construction when construction claims arise. The text of the article is reprinted here.
“As your business grows it becomes increasingly more important to have available a trusted team of financial and legal advisors. Including an experienced construction lawyer on your team can go a long way to help keep your projects out of trouble and thus help ensure that your business remains healthy and profitable.
Claims and disputes in the construction industry are commonplace. On a construction project of any complexity, disputes are often the rule–not the exception. During the lifetime of most construction companies, it is likely that the company will become embroiled in a claim or dispute that cannot be resolved without the assistance of a lawyer. While it is best to avoid construction claims and disputes from the beginning of a project, it is important to resolve them quickly and efficiently once they arise.
Avoidance or a quick resolution of disputes is often crucial to the economic success of the project. Claims and disputes involving construction projects tend to be technically complex and factually intensive. As a result, arbitration or litigation of construction disputes can be time consuming and costly.
Construction litigation is generally characterized as “complex litigation” because the legal and procedural issues involved are typically very complex. If you are faced with a construction claim or dispute, it is very important not only to hire a lawyer who knows his or her legal trade but to hire a lawyer who also knows the construction trade—i.e., hire a seasoned construction lawyer.
Hire a seasoned construction lawyer, not a general practitioner.
Your first goal should be to find a lawyer with a thorough knowledge of the construction industry. Owning a pickup truck and having a law license does not make one a construction lawyer. Nonetheless, there is no shortage of available lawyers who have handled a few matters for construction companies and later market themselves as “construction attorneys.” Successfully drafting construction contracts or later litigating, arbitrating, mediating, negotiating or otherwise resolving construction claims and disputes, however, requires that the lawyer have a thorough familiarity with the construction industry and a thorough knowledge of the unique problems that arise on construction projects.
When selecting a construction lawyer, you should consider the following. Does the lawyer and the lawyer’s firm concentrate on representing participants involved in the construction industry? Does the lawyer understand the construction business and have experience in helping construction participants avoid and efficiently resolve construction claims and disputes? Does the lawyer have any practical hands-on experience in the construction industry? Does the lawyer have a background in construction, engineering or architecture? Note that while having a technical or construction background is certainly very helpful, many outstanding construction lawyers have never picked up a hammer. If presented with disputes while the project is ongoing, does the lawyer understand that typically it is critically important to keep the project moving forward while helping to resolve disputes that may threaten to derail the project? Has the lawyer published, lectured and taught on construction law topics? Is the lawyer someone whom you can trust and someone with whom you can develop a long term relationship?
Also consider the law firm that the construction lawyer is associated with. How deep is the law firm’s bench of construction lawyers? What is the breadth of their experience? What sub-specialties are they focused on? Do other members of the law firm have focused experience in particular construction law issues that can be drawn upon if necessary? If the law firm has an extensive in-house network of construction lawyers, the collective experience and knowledge base of those lawyers can be a tremendous asset to the client. Have other members of the law firm extensively published, lectured and taught on a wide variety of construction law topics? Is the law firm, and are its members, actively involved in the construction industry? Is the law firm, and are its members, actively involved in trade associations? Does the law firm keep abreast of current legal issues and changes in the law affecting the construction industry? Is the law firm dedicated to sharing that information with the industry via newsletters, white papers and client alerts? How long has the law firm been in business? Does the law firm have an established national practice so that it can support you as your own business grows and expands into other geographical regions? Is the law firm, and are its members, well-respected by their industry peers? Has the law firm earned a good, solid national reputation within the construction industry?
Get a seasoned construction lawyer involved early.
Consider developing a long term professional relationship with an experienced construction lawyer. A seasoned construction lawyer can be a very important member of your team of valued and trusted advisors. Most participants in the construction process who have been involved in a contentious claim or dispute will agree that one of the best ways to avoid a claim or dispute is to get a seasoned construction lawyer involved at the very beginning of a project and, certainly, as soon as a claim or dispute arises.
A seasoned construction lawyer can assist and support you in obtaining “quiet” successes by providing thoughtful and experience-based advice and counseling that enable you to achieve your business goals without contentious disputes or protracted litigation. If litigation or arbitration becomes necessary to resolve a claim or dispute, a seasoned construction lawyer can help you develop parallel strategies to (1) efficiently advance the case toward a court verdict or an arbitration award, and (2) identify and seize upon opportunities to resolve claims and settle disputes early.
On the front end of a project, the construction lawyer can help draft or review contracts and provide sage advice regarding how best to allocate and manage contractual risks. During the construction phase of a project, the construction lawyer can help guide you through the minefields that often threaten the economic success of a project. Construction claims and disputes during construction typically involve very short deadlines and strict contractual notice requirements. When a claim or dispute arises, the construction lawyer can help develop strategies for resolving the claim or dispute early or for minimizing the risks going forward. On the back end of a project, the construction lawyer can assist you in: closing out the project; collecting unpaid contract balances; and perfecting lien and bond claims. In most states, the courts strictly interpret statutes governing mechanics’ and materialmen’s liens and claims against payment and performance bonds. Courts strictly enforce the relatively short filing deadlines associated with lien and bond claims. Thus, it is critically important that you do not wait until days before the filing deadline to contact a construction lawyer for assistance.
Initiate a Conflicts Check. The construction industry is sometimes a small world. Understand that once you have selected a construction lawyer, there may be existing conflicts or potential conflicts of interest that prevent the selected lawyer from representing you on a particular matter. For example, the lawyer may already be representing an opposing party. When you first contact your selected construction lawyer regarding any new matter, you should expect the lawyer to run a “conflicts check” before the lawyer can discuss your case with you. The purpose of running a conflicts check is to make sure that the law firm does not already represent someone whose interests are opposed to yours. Thus, before you share any confidential information with the lawyer, be prepared to provide the following information: (1) name of your company and the names of all related business entities; (2) names of all adverse parties with interests opposed to yours; (3) names of all potentially adverse parties; (4) the project name; and (5) the project location. Once the construction lawyer has reported that there are no conflicts, you will then be free to candidly discuss the facts of your case.
Prepare and organize for the initial conference.
There are many reasons to hire a construction lawyer. For example, your objective in hiring a construction lawyer may be to (1) have a contract reviewed or drafted, (2) get an evaluation of a claim or dispute, (3) file a lawsuit or prepare a demand for arbitration, (4) obtain a defense of an action filed against you, (5) initiate a request for mediation, (6) file a lien, (7) assist in recovering an unpaid contract balance, or (8) to get legal advice about the consequences of a particular course of action. In any event, be prepared to define and discuss your overall objectives and to clearly communicate what you would like to achieve by involving the construction lawyer.
Organize your files before meeting with your construction lawyer. Have handy all of the documents, including contracts, subcontracts, or purchase orders, that may be relevant to the issues you would like to discuss. The quality and completeness of the information that you provide to your lawyer can have a direct impact on the reliability of any predicted outcomes that are discussed.
A basic principle of construction law is the Spearin doctrine: a 1918 United States Supreme Court decision which remains as one of the landmark construction law cases. The Spearin doctrine, set forth in United States v. Spearin (248 U.S. 132), generally stands for the proposition that an owner impliedly warrants the information, plans and specifications which an owner provides to a contractor. As such, the contractor’s liability may be limited if loss or damage occurs solely from insufficiencies or defects in such information, plans and specifications. Conversely, contractors are bound to build according to the plans and specifications, and deviations from the plans and specifications may result in liability even when no defects in the work are present. When the government contracts for supplies to be manufactured or a building constructed in accordance with the government design specifications, there is an implied warranty that if the specifications are followed, a satisfactory product will result.
An important part of the Spearin doctrine relates to damages that are due to the contract if the warranty is breached, i.e., the specifications are defective. In that case, the contractor is entitled to damages equal to the amount reasonably expended in trying to comply with the defective specifications.
However, such liability will only attach if the contractor relies on government “design specifications” and not merely “performance specifications.” Government specifications are considered “design specifications” where (1) the government sets forth in precise detail the materials to be employed and the manner in which the work is to be performed and (2) the contractor is not permitted to deviate from those specifications. (This would generally not apply then to the increasing use of design build project, where the contractor is heavily involved in the design and value engineering of projects). Examples of design specifications include detailed measurements, tolerances, materials, and elaborate instructions on how to perform the contract. By contrast, performance specifications merely set forth an objective to be achieved, and the successful bidder is expected to exercise its ingenuity in selecting the means to achieve that objective.
If a contractor complies with the government’s defective design specifications, the contractor should not be found liable for any ensuing loss arising from those defective specifications and should be able to recover damages equal to the amount expended in trying to comply with the defective specifications.
If you perform building construction services in Minnesota and none of the eleven exceptions above apply to you, you need to register with the Pilot Project before September 15, 2012. Registration with the Pilot Project does not relieve you of any other licensing, registration, or certification requirements – you will still need to maintain all applicable licenses and certifications.
How to Register for the Pilot Project
The Online Registration Process
Registration will occur through a website, and will be free of charge. The website will process registration applications and promptly issue registration certificates electronically to successful applicants. The Department of Labor and Industry is hoping to have the website available for registration beginning July 1st, but it is possible the website may not be up and running until later in July. When it is available, there will be a link to the registration website displayed prominently on the Department of Labor and Industry homepage.
What Information is Needed for Registration
Anyone registering as an individual, owner, or part-owner will need the following information (remember that employees do not need to register, as their employers will register for them):
You will need to sign the application and certify that you have reviewed it and determined that the information you have provided is true and accurate. You will enter your name on the website electronically, but this certification will be considered a legal signature.
You must remain registered while providing construction services for another person. Registration with the Pilot Project is free. Your registration will be good for the duration of the two-year trial period but may need to be renewed later if the Pilot Project is extended by the legislature.
If the structure, legal form, or ownership of your business changes, the new business or owner will need to submit a new registration. The registration cannot be transferred to another person. You will also need to update any information submitted on your original registration (such as address or phone number) within 15 days of any change. Information changes can be provided electronically on the registration website.
Public and Private Information
The public website will include certificates of registration with the registered person’s legal business name, including any assumed name, as filed with the secretary of state. The certificates will also show the person’s business address (as entered on the application), the effective date of the registration and the expiration date. The statute states that any other data or documentation submitted to the commissioner for registration is private or nonpublic data.
Avoiding Statutory Violations
It is illegal under the new law to:
Penalties and Consequences
The maximum penalty for failure to register is $2,000, but the commissioner “shall forgive the penalty if the person registers within 30 days of the date of the penalty order.” This means that any penalty you receive for failing to register with the Pilot Project will be waived if you complete your registration within 30 days of receiving the penalty order.
Penalties for other violations (like contracting with or paying an unregistered person, or holding yourself out as an independent contractor without satisfying the requirements) appear to carry the same potential penalties as any other licensing violation, which means that the commissioner may issue an administrative order to any person who the commissioner determines has committed a violation of the law. The administrative order may require the person to correct the violation, may require the person to cease and desist from committing the violation and/or may assess monetary penalties. The commissioner may issue to each person a monetary penalty of up to $10,000 for each violation of applicable law committed by the person. Existing law also states that the commissioner may order that part or all of the monetary penalty will be forgiven if the person to whom the order is issued demonstrates to the commissioner by the 31st day after the order is issued that the person has corrected the violation or has developed a correction plan acceptable to the commissioner. The law also allows for failure to correct a violation (as required by an order) to be considered contempt of court. Finally, violating the law could lead to suspension or revocation of your registration or license if you have one.
Note that the commissioner has a great deal of discretion in issuing fines or other penalties, and because this law is new, it is difficult to know at this time what fines or penalties should be expected for violations.
Employee Classification of Independent Contractors
The goal of the Pilot Project is to make it easier for employers and government agencies to determine whether workers are independent contractors or employees, and to deter misclassification between these categories. In an effort to clarify the status of a particular worker, the new law articulates nine factors which must be met for a worker to qualify as an independent contractor.
The nine factors are:
The “and” before the final factor indicates that all nine factors must be met in order for an individual worker to qualify as an independent contractor. Owning your own business or LLC does not automatically qualify you as an independent contractor. Owners and partial owners of businesses must satisfy the nine factors, and must also submit invoices in the name of the business entity. If you do not satisfy the nine factors and submit invoices in the name of your business entity, you will be considered an employee rather than an independent contractor, regardless of LLC (or other business entity) status. This also means your employer will need to satisfy any applicable requirements for unemployment and workers’ compensation insurance, along with any other laws related to employees.
Tax Withholding Requirement Repealed
The new law also eliminates the existing two percent tax withholding requirement for contractors, effective for payments made after June 30, 2012.