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.

Insurance Information for Tornado Victims

From the deep south, through the midwest, and even into the Carolinas, recent bad weather has spawned multiple deadly tornadoes. While we grieve for the lives lost, many are faced with the task of rebuilding.

Undoubtedly, most of you affected will file insurance claims to compensate you for your losses and assist you in restarting your lives. It is important that you read your policy carefully to understand your rights.

In general, insurance policies compensate you in one of two ways: 1) actual cash value, which gives you the appraised value of your property at the time of the damage and incorporates a depreciation deduction, or 2) replacement value, which gives you the value of new items of like quality. Replacement value coverage is usually an insurance add-on that requires a higher premium. When compensating for replacement value, the insurance company will initially pay the actual cash value while withholding the depreciation until repairs are complete, thereby forcing you to front some of the costs. So, though replacement coverage gives you a larger recovery than actual cash value, the burden on you is still great.

Regardless of your policy, you do not have to accept what the insurance company offers. They have appraisers that represent their interests - so should you. Virtually every insurance policy has a quasi-arbitration provision that enables you to hire your own appraiser - the insurance company must comply. Your appraiser and the insurance company's will select a third-party umpire to determine the amount of your claim.

Additionally, insurance companies have a duty to handle your claim in good faith, without delay, and with the intent to fully compensate you for your loss. Having a knowledgeable attorney in your corner can help expedite the claims process and increase your recovery.

As we enter the turbulent spring months, and while we hope and pray that the devastation of this past year will not repeat itself, it is important to be prepared if and when you face the task of rebuilding.


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.

Executing on a Judgment

One of the biggest issues facing litigants and attorneys in a poor economy is the ability to collect on a judgment. My guess is that a majority of the public think that once a judgment is entered, that amount of money is immediately sent to the prevailing party. Whether dealing with an individual or struggling company, too often a sizable judgment is not collectible. The law creates several avenues for debtors to escape paying judgments and to retain certain personal assets.

When consulting an attorney about your case, it is important that he/she discloses to you, in addition to the merits of your case, the likelihood of collection. The best attorney in the world is valueless if your large jury verdict only exists on paper. Often times, the litigants themselves are the most knowledgeable concerning an opposing party's assets.

Before pursuing a case, it is important to have an attorney that 1) can ascertain the likelihood of success, 2) can discover other responsible parties, if any, 3) is experienced in executing on a judgment. Executing on a judgment involves complex issues that require constant communication with the Sheriff's office, knowledge of supplemental proceedings to discover assets, and a commitment to your case well after a judgment is awarded.



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.