Subcontractor Agreements Are “Residential Construction Contracts” Under New Jersey Construction Lien Law
In re Kara Homes, Inc., 374 B.R. 542 (Bankr. D.N.J. 2007)
On an issue never before addressed in a published opinion, a U.S. Bankruptcy Court decided an issue critical to the New Jersey Lien Law. A major New Jersey based residential home building group (the “Debtors”), owning several large single-family home development projects, entered numerous agreements with various subcontractors who provided goods and services on the projects. When the Debtors failed to pay, the subcontractors took steps to protect their rights under the New Jersey Construction Lien Law. However, most of the Debtors initiated Chapter 11 bankruptcy proceedings before the subcontractors could fully complete all of the Lien Law’s requirements. The Debtors then filed adversary proceedings to determine the extent, validity, and priority of any liens.