Friday, February 19, 2016

Lien Law Online eLert for 2/17/2016 - New Jersey

February 17, 2016

The New Jersey chapter of has been updated with the latest cases through the end of 2015.  Two recent cases address the applicability of the New Jersey Construction Lien Law, N.J.S.A. 2A:44A-1 et seq., and Municipal Mechanic's Lien Law, N.J.S.A. 2A:44-125 et seq., in the context of public-private partnerships, so-called "P3 projects."  In Morris County Improvement Authority v. Power Partners Mastec, LLC, No. A-5082, 12T4, 2015 N.J. Super. Unpub. LEXIS 634 (App. Div.), certif. granted, 218 N.J. 532 (2014), the Appellate Division refused to enforce a subcontractor's liens (totaling $50 million) that it had filed under both statutes.  As it relates to the municipal mechanic's liens, the Court held that the County Improvement Authorities Law, N.J.S.A. 40:37A-127, immunized the Morris County an Somerset Improvement Authorities from municipal mechanic's liens.  As for the construction liens, the Court held that they could not attach to the municipal bond funds, because such liens may only attach to real estate (or a leasehold interest therein).  The New Jersey Supreme Court granted certification in this case and will review the interplay between the County Improvement Authorities Law and the Municipal Mechanic's Lien Law.

In EnviroFinance Group, LLC v. Envt'l Barrier Co., LLC, 440 N.J. Super. 325 (App. Div. 2015), the Appellate Division upheld the lower court's determination that construction liens on a project built on wetlands owned by the Meadowlands Conservation Trust could not be discharged.  The lower court found that the liens were properly asserted against a private leasehold interest and assets and not against the public realty.  The Appellate Division likewise rejected the exemption for the public improvement liens in the Constr! uction Lien Law ("No liens shall attach nor a lien claim be filed...[f]or public works or improvements to real property contracted for and awarded by a public entity ....") N.J.S.A. 2A:44A-5(b). The Court rejected plaintiff's argument that this provision for "improvements to real property" is not contingent upon a project being "contracted for and awarded by a public entity."

Dennis A. Estis, Contributing Author/Steven Nudelman, Contributing Author

Greenbaum, Rowe, Smith & Davis LLP