Most state mechanic’s lien statutes recognize that demolition is an improvement to real estate and therefore a lienable service. In many situations, there can be no redevelopment, no site remediation, and no new construction without demolition.
The lien statutes have done well in recognizing that de-construction is a phase of construction. However, the lien statutes have failed to account for an important aspect of demolition – the salvage of equipment and materials. Mechanic’s lien statutes are structured around the “contract price.” On many demolition projects, the salvage rights and salvage revenue is a fundamental component of the contractor’s compensation. How does that factor into the contract price?
A New Jersey court recently ruled that revenue derived from materials transferred to a demolition contractor were part of the contract price and part of the lien fund available to unpaid subcontractors. The lien fund was not limited to the earned amount of the stipulated contract price.
The other case in this issue involved a cost/technical tradeoff in a “best value” procurement. While the agency source selection authority made some unsupported, extraneous comments about possible cost advantages in the higher price proposal, the decision was supported by a detailed, head-to-head comparison of technical advantages.
