North Carolina General Contractor Claim of Lien on Real Property
In North Carolina, prime contractors may file mechanics liens against property where work is performed.
North Carolina General Notice of Lien Upon Funds
A subcontractor or supplier may deliver a Notice of Lien Upon Funds to any party “up the contract chain” once payment is owed to them. Delivery of this notice “freezes” the funds in the hands of the party holding said funds. If they distribute the funds in spite of the notice, the distributing party may be personally liable to the notifying party. If the wrongful payment is made by the property owner, this allows the sub or supplier to file a lien against the property.
Further, while this notice is not required, it is required prior to the filing of a lien by a sub or supplier. And while there is no time requirement for when the notice should be filed, it is only effective against funds being held. As such, time is of the essence.
North Carolina Mechanics Lien Release
A mechanics lien may be canceled for a number of reasons, including that the claim has been paid and satisfied.
North Carolina Notice of Contract
While not required, a prime contractor may benefit from filing and posting a Notice of Contract. This must be filed with the recorder and posted on the jobsite within 30 days from the issuance of the building permit. By filing and posting a Notice of Contract, a prime contractor limits its exposure to “double-payment.”
North Carolina Notice of Subcontract
If you are a 2nd or 3rd tier subcontractor or supplier, you may want to consider sending a Notice of Subcontract to the contractor. While not generally required in North Carolina, if the general contractor filed a Notice of Contractor, the sending of a Notice of Subcontract is required to preserve your lien rights. The Notice of Subcontract requires the contractor to send 2nd and 3rd tier subs notice within 5 days of paying a subcontractor on the project, to alert them that money is changing hands. There is no time period when this must be sent, but it is only effective as of the date sent.
North Carolina Subcontractor Claim of Lien on Real Property
In North Carolina, subcontractors and suppliers may file a mechanics lien in 2 circumstances: (1) through subrogation of the prime contractor’s right to file; and (2) in response to the property owner wrongfully paying the general after the receipt of a Notice of Lien Upon Funds.