New Jersey Construction Lien Law’s Lien Fund Concept

The potential lien fund ultimately available to an EPC contractor’s subcontractor is circumscribed by the relationship between the EPC contractor and the owner under the New Jersey Construction Lien Law (“CLL”). “Underlying the lien fund concept is the principle that an owner, contractor, or subcontractor should not be compelled to pay twice for the same work or services when a valid lien claim is filed.“ Thomas Group, Inc. v. Wharton Senior Citizen Housing, Inc., 163 N.J. 507, 522 (2000)(emphasis added); see, also, 41 N.J. Prac., Construction Law § 12.58, “Construction Lien Law–The Lien Fund” (2004).

In this manner, the protection enjoyed by the owner under the CLL exists at each contractual level that contains parties with lien rights under the CLL. Thus, simply stated, the EPC contractor cannot be compelled to pay out more in sub-subcontrator lien claims than dictated by the contractual relationship between the EPC contractor and the subcontractor. Craft v. Stevenson Lumber Yard, Inc., 179 N.J. 56, 80 (2004) (“Because the lien fund can only be based on what is actually owed, when nothing is owed there can be no fund”).

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