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D.D.B. Interior Contracting, Inc. v. Trends Urban Renewal Association, Ltd.

176 N.J. 164, 821 A.2d 1135 (2003)

CONSTRUCTION LIENS—In the future, to be effective, a construction lien filed on behalf of a corporation must be signed by a corporate officer.

A subcontractor filed a construction lien claim to secure payment for renovations it performed. It provided its attorney with a power of attorney to file the claim. The attorney signed the claim. The contractor and property owner moved for a discharge and forfeiture of the lien claim on the ground that it was not properly filed because it was not signed by a corporate officer. The lower court agreed and discharged the lien. On appeal, the subcontractor argued that the lien was valid because the power of attorney authorized the corporation’s attorney to sign the lien claim and it had substantially complied with the Construction Lien Law. The Appellate Division affirmed the lower court decision, finding that the statute clearly states that a lien claim must be signed, acknowledged, and verified by a corporate officer. Therefore, the Appellate Division thought a court had no authority to recognize the power of attorney as a valid method of signing the lien claim. On appeal, the Supreme Court reversed as to this case only. It found the construction lien valid because the Construction Lien Law does not address whether a person may be granted the powers of a duly authorized officer by way of power of attorney and the subcontractor reasonably relied on its attorney’s representation that the power of attorney was permitted. The Court noted that the statute requires a corporate officer to sign the lien claim to protect a corporation and its shareholders by restricting the authority to expose the corporation to liability to a few individuals. In this case, the subcontractor had one shareholder who was also the officer. There was no concern about harming the shareholders, since the owner was the only person whose interest could have been exposed to liability and he was the one who signed the power of attorney permitting the attorney to file the lien claim. In the future, only corporate officers may sign construction lien claims.

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