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.

Mechanic's and Materialmen's Liens

One of the most important legal remedies available to contractors and subcontractors is the right to file a lien.  Liens serve a variety of functions, the most important of which is 1) to put the owner on notice that you have not been paid, 2) to make a secure claim for payment.

Filing a lien in state court requires paying a nominal fee and serving the interested parties.  It is very important that liens are timely filed and that all filed documents contain accurate information. Unlike many things filed in state courts, a lien cannot be amended. Instead, in the event of an error, you must file a new lien and run the risk of filing too late. In North Carolina, you must file a lien within 120 days of the last substantial work on the property.

Failure to follow the strict guidelines imposed by your governing statutes could mean losing your lien rights. Often times the modest cost of hiring an attorney to file a lien can mean the difference between tens of thousands of dollars and nothing.  If you are a sub and your contractor files bankruptcy or becomes insolvent, a timely filed lien on funds and a lien on real property can salvage your business.  If money is owed to your contractor and you have not been paid, a lien directs the owner to make payment to you before paying the contractor any additional funds.

Second and third tier subs have similar remedies.

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.