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Construction Lien Law Changes in New Jersey

A recent ruling in the United States District Court for the District of New Jersey has significantly altered the legal landscape for filing Construction Liens in New Jersey.[1] The Court in Cooper Elec. Supply Co. v. Linear Elec. Co., affirmed a bankruptcy court's decision holding that a construction lien filed after a debtor had filed for bankruptcy was void ab initio because it violated the automatic stay provision of 11 U.S.C. § 362, which provides for a stay on any "act or to create, perfect, or enforce any lien against property of the [debtor's] estate." No. CV 15-06429 (SDW), 2016 WL 781770 (D.N.J. Feb. 29, 2016); 11 U.S.C. § 362. Central to the Court's reasoning was its expansive reading of the property of the debtor's "estate," as defined in 11 U.S.C. § 362, to include accounts receivable. This expansive reading made way for the Court to conclude that the accounts receivable underlying the "Appellants' construction liens were [property] of the estate" and thus fell "squarely within the broad prohibitions of the automatic stay provisions." Id. at *3. An appeal to the United States Court of Appeals for the Third Circuit was filed on March 8, 2016.

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Todd & Levi LLP
444 Madison Avenue, Suite 1202
New York, NY 10022

Phone: 212-308-7400
Fax: 212-308-8450
New York Law Office

Todd & Levi, L.L.P., is a New York, New York, law firm. Attorneys at the firm represent clients throughout New York City, Manhattan, Queens, Brooklyn, The Bronx, Staten Island, Westchester and Long Island and throughout New York County, Kings County, Bronx County, Richmond County and Queens County.