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This blog does not create an attorney client relationship. You should not rely on this information for advice. If you have a legal question you should contact an attorney.

Thursday, June 13, 2013

New lien laws that every contractor and sub-contractor must know

As of April 1, 2013, there are new lien laws that every contractor and subcontractor MUST be aware of prior to commencing work on a project.  These laws apply to any project that first begins work after April 1, 2013.

As a result of extensive lobbying by the title insurance industry, the NC General Assembly recently enacted N.C. Gen. Stat. 44A-11.1 and 11.2.  In short, these statutes have created the position of a lien agent for any project greater than $30,000.00 (unless the project is at a private residence, to which exceptions apply).  Every owner is now required to designate a lien agent prior to commencement of construction.  Said lien agent shall be designated on the building permit or somewhere else on the property, and said individual's name shall be given by owner upon request of the contractor.  Contractors are thus required to give the name of designated agent to subs, and so forth down the line.

Here is the most important part: if you do work or supply materials to a work site, you are deemed a potential lien claimant.  In order to indefinitely protect your future lien rights (as against future owners of the property), you must send a notice to lien agent that you are a potential lien claimant within fifteen days after first furnishing labor or materials. 

An attorney experienced in representing contractors and subcontractors can help you prepare and serve these notices.  If a notice is not timely and properly prepared and served, you potentially lose your right to enforce a lien on the property against a subsequent purchaser.

It is important to note that a notice to lien agent (described above) is not a substitute for filing a lien.  But for a few minor changes, statutes governing liens on property and liens on funds remain unchanged.  As has always been the case, if you find yourself in a situation where payment for work or materials is delayed, you should contact an attorney to protect your rights.  S/he can also advise you on ways to best protect your business in the future.

This blog does not create an attorney-client relationship. You should not rely upon this blog for legal advice, but instead should consult an attorney experienced in your area of concern.

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