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Mansion Supply Company, Inc. v. Bapat

305 N.J. Super. 313, 702 A.2d 509 (App. Div. 1997)

CONTRACTORS; LIENS—The time limit for filing a Notice of Unpaid Balance and Right to File Lien and to obtain a successful arbitration result under the N.J. Construction Lien Law (for residential property) is 90 days. A contractor that waited until the 89th day to file couldn’t possibly get a successful arbitration result within the 90 day period therefore couldn’t get its lien. Both must be finished in 90 days.

This case analyses the operation of the New Jersey’s Construction Lien Law N.J.S.A. 2A:44A-1 to -38, which replaced to the Mechanics’ Lien Law. The new law requires that a claimant file a Notice of Unpaid Balance and Right to File Lien (“NUB”) and a demand for arbitration not later than 90 days after the date on which the claimant received the last material for which he has not been paid. The arbitration hearing and decision, as well as the filing of a lien claim (if the claimant was successful at arbitration) must also occur within the same 90 day window. In this case, a construction company went out of business before it had completed a house and without paying a supplier for materials. On the 89th day after the last delivery of supplies, the supplier filed a NUB along with a demand for arbitration and a form of lien claim. The arbitrator discharged the lien, determining there was no way the lien claim could be timely filed within the prescribed 90 day period since the hearing was not held until after the 90th day. The supplier moved to vacate the arbitrator’s decision and the trial court granted summary judgment enforcing the lien claim. The judge concluded that although liens must be filed within 90 days, the legislative intent in the case of residential construction contracts allows up to 130 days within which to complete the lien claim process.

The Appellate Division first looked at the plain language of the law, stating that if the language was clear and unambiguous, it would be enforced as written. The Court found that the text of the law indicated an intent to establish a uniform system for resolution of lien claims affecting residential real estate. The Court held that the plain meaning of the statute required all lien claims to be filed with the county clerk not later than 90 days after the date the last material was supplied.

The Appellate Division disagreed with the trial court, concluding there was legislative intent to “stabilize the marketplace by reducing delay and uncertainty in the acquisition and financing of residential housing.” Based on that intent, the Court held that the time limit for filing a lien claim concerning residential housing was only 90 days. Accordingly, the claimant should have filed a NUB and demand for arbitration sufficiently in advance of the 90 day limit to allow the arbitration process to run its course and to permit the claimant, if successful, to file a lien claim within the same 90 day period. Filing a form of lien claim before a decision has been rendered in anticipation of success, as the claimant did in this case, is not sufficient to comply with the 90 day statutory requirement. The Court reversed the grant of summary judgment, holding that the original decision of the arbitrator dismissing the claim as untimely filed was correct.


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