The ABCs of Lien Law in North Carolina

On November 23, 2010  By Guest Blogger

Guest Post by Melissa Brumback

Melissa Brumback is a litigation partner at Ragsdale Liggett PLLC in Raleigh, North Carolina where she focuses on construction law issues, often representing architects and engineers in construction defect claims. She maintains a blog for construction professionals called Construction Law in North Carolina. She can be reached at mbrumback@rl-law.com or on Twitter @melissabrumback

Each state has its own (sometimes quirky) lien laws for contractors. This post is a basic primer on the ABCs of lien law in North Carolina.

Who can file a lien?

Anyone who furnishes materials or labor to improve real property can file a lien on that property. This includes design professionals who provide services related to improvement of real property, contractors, and subcontractors (down to the 3rd tier).

What types of liens are there in NC?

There are three types of lien claims in North Carolina.

1. The Claim of Lien on Real Property (NC Gen. Stat. §44A-12) is for a person who contracts directly with the owner of the property. This can be a general contractor, a separate independent contractor, or a design professional.
2. The Notice of Claim of Lien upon Funds (NC Gen. Stat. §44A-18 and §44A-19) is available to subcontractors (down to third-tier subcontractors), and allows them to have a lien right to any funds owed to the party that contracted with them in the chain of title. In other words, if the owner still owes money to the general contractor, and the owner receives a Notice of Claim of Lien upon Funds by a subcontractor (and the lawsuit to enforce the lien is thereafter properly filed), the owner cannot pay the general contractor until the subcontractor’s lien is extinguished.
3. The Subrogated Claim of Lien on Real Property (NC Gen. Stat. §44A-23) also provides real property lien rights to the subcontractor, to the extent the party he contracted with has lien rights.

When and Where must a lien be filed?

Claims of Lien on Real Property, and Subrogated Claims of Lien on Real Property must be filed in the clerk of court where the property is located, within 120 days of the claimant’s last date of furnishing.

What must be included in the lien?

The Claim of Lien must include several pieces of precise information, including:

1. The name and address of (a) the person claiming the lien (the “claimant”); (b) the record property owner at the time the lien is filed; and (c) the person who claimant contracted with to provide labor/materials
2. A description of the real property (which can include street address, tax/block number, reference to a recorded deed, or other description of the property so long as it reasonably identifies the property at issue)
3. The dates that the labor/materials were (a) first furnished and (b) last furnished by claimant
4. A general description of the labor or materials (a general description is sufficient; no itemized list or detailed statement is required)
5. The dollar amount claimed

What does “perfecting a lawsuit” mean?

A lawsuit must be filed to enforce a claim of lien. This is called “perfecting” the lien, and it must be done within 180 days of a claimant’s last date of furnishing. The lawsuit can be filed in any proper county so long as an appropriate Lis Pendens is also timely filed in the county where the property is located.

What special remedies are available for a lien claim?

If a lien lawsuit is perfected and a judgment rendered, the court can direct the property to be sold to satisfy the lien. Additionally, you can recover attorney fees for the lien lawsuit. Pretty cool, huh?

In summary:

As you can imagine, liens can be very powerful tools to help ensure recovery of money owed to contractors and subcontractors on a project. The key to exercising your lien rights is to keep watch on the running of the claim period (use of a program such as Scott’s Lien Pilot can help with this) with this) and to ensure that the lien is (1) properly drafted; (2) timely served; (3) appropriately filed; (4) perfected with a timely lawsuit. This is not an area where you can make a mistake—liens are subject to strict rules that must be followed to the t. If in doubt about a lien issue, contact a knowledgeable construction law attorney in your jurisdiction.

Related posts:

1. The North Carolina Mechanics Lien Scheme
2. Will North Carolina Be Changing It’s Mechanic Lien Laws?
3. Priority of All North Carolina Liens in Jeopardy with Pending Appeals Case
4. Contractor files $3 Million Lien in North Carolina
5. Myths and Facts of Properly Serving a Mechanics Lien in South Carolina