Got Those Supplier Ascertaining Allocation Blues?

In L & W Supply Corp. v. Desilva, 429 N.J. Super. 179 (App. Div. 2012), the Appellate Division of the New Jersey Superior Court concluded that, in certain circumstances, a construction lien claimant has an obligation to inquire into the source of funds paid for materials provided for construction projects or face the loss of the right to file a lien. The decision fills in some of the contours of the supplier’s duty set forth by the Supreme Court in Craft v. Stevenson Lumber Yard, Inc., which held that a supplier has a duty to allocate payments based on what he knows or should know about the source of the payments. The new decision has ramifications for suppliers and owners.