ASSEMBLY FINANCIAL INSTITUTIONS AND INSURANCE COMMITTEE

STATEMENT TO

ASSEMBLY, No. 410

with committee amendments

STATE OF NEW JERSEY

DATED: JUNE 10, 2010

      The Assembly Financial Institutions and Insurance Committee reports favorably and with committee amendments Assembly Bill No. 410.

      This bill revises the “Construction Lien Law,” P.L.1993, c.318 (2A:44A-1 et al.), which provides a statutory scheme for private contractors, subcontractors and suppliers to secure payment for their labor and materials, while not impeding the free transfer of real property, through a lien filing process. The bill embodies the text of the New Jersey Law Revision Commission’s Final Report on the Construction Lien Law.

      This bill revises the "Construction Lien Law," which was enacted in 1993, by:

      (1) clarifying and adding certain defined terms, to conform to actual construction industry usage;

      (2) clarifying procedures for the filing and amending of the lien claim and for the calculation, distribution and enforcement of the lien fund;

      (3) providing more specific provisions for discharging a satisfied lien claim;

      (4) further defining the arbitrator’s role;

      (5) modifying time limits for filing and perfecting residential construction contract lien claims;

      (6) specifying the application of lien claims to community association property; and

      (7) addressing certain ambiguities as to mortgage priorities with respect to lien claims.

      This bill was pre-filed for introduction in the 2010-2011 session pending technical review.  As reported, the bill includes the changes required by technical review, which has been performed.

COMMITTEE AMENDMENTS

      The committee amendments to the bill:

     -provide that while the owner, community association, contractor or subcontractor may deposit with the clerk of the Superior Court of New Jersey, funds constituting an amount equal to 110% of the amount claimed by the lien claimant, in the case of a lien claim arising from a residential construction contract, the amount deposited shall be no greater than the earned amount of the contract between the owner and the contractor as determined by an arbitrator; 

      -clarify that the term “value” as used in the definition of “lien claim”  includes retainage earned against work, services, materials or equipment furnished; and

      -provide that an amount of a lien on an interest of a person other than a tenant is limited to the amount that person agreed, in writing, to pay minus payments made by that person or on behalf of that person, in good faith, prior to the filing of the lien.