Appellate Division Affirms Discharge of Improperly Served Construction Lien

October 31, 2017 | No Comments
Posted by Adam Garcia

In a recent decision, Santander Condominium Association, Inc. v. AA Construction 1 Corp., A-0525-15T3 (App. Div. Oct. 13, 2017), the Appellate Division confirmed that construction liens that do not strictly comply with New Jersey’s Construction Lien Law (“Lien Law”), N.J.S.A., 2A:44A-1 to -38, are subject to discharge, and the lienor subject to owner(s)’ attorneys’ fees.

In Santander, the Santander Condominium Association (the “Association”) brought a suit seeking discharge of a construction lien filed by AA Construction 1 Corporation (“AA”), a subcontractor hired to perform certain facade work at the Santander Condominiums in Asbury Park, New Jersey.  In its suit, the Association also sought an award for its counsel fees under section 30(e) of the Lien Law, N.J.S.A. 2A:44A-30(e).  The central contention of the Association was that AA did not serve its lien claim on the Association, resulting in the Association’s remission of payment to its general contractor.  It was undisputed that the AA’s lien claim had been sent by certified mail and regular mail to the condominium property, but that it had not been sent to the Association’s registered address, which was at an unrelated off-site location.  AA opposed discharge, asserting that the mailing of the lien claim to the condominium property accorded with the Lien Law requirement that service of a lien claim be made by personal service or by mailing to the “last known business address or residence of the owner.” N.J.S.A. 2A:44A-7.

The trial court rejected AA’s argument, discharged the lien, and granted the Association its counsel fees.  The trial court held that the mailing of the lien claim to the condominium property did not comply with the service requirements of the Lien Law.  On appeal, the Appellate Division affirmed in full, observing that, because the “condominium property … was neither [the Association’s] residential address nor its business address”, AA failed to effectuate proper service of its lien claim in accordance with the Lien Law.  Accordingly, the Appellate Division upheld the trial court’s discharge of the lien and affirmed the award of counsel fees.

Contractors and material suppliers should take note of the Santander decision.  As this recent explication of the Lien Law makes clear, courts are continuing to strictly construe the Lien Law.  Lien claims that do not conform to the strict requirements are subject to discharge, and lienors of defective lien claims are exposed to owner(s)’ attorney fee claims.  Lienors are cautioned to seek the advice of experienced counsel before making their lien claims.  The attorneys at Giordano, Halleran & Ciesla are experienced in handling all aspects of construction law, including the Lien Law.  If you are in need of assistance, the attorneys at Giordano, Halleran & Ciesla are available for consultation.

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