Contractors – Construction Liens – North Carolina
Note: This summary is not intended to be an all inclusive discussion of North Carolina’s construction or mechanic’s lien laws, but does include basic provisions.
What is a construction or mechanic’s lien?
Every State permits a person who supplies labor or materials for a construction project to claim a lien against the improved property. While some states differ in their definition of improvements and some states limit lien claims to buildings or structures, most permit the filing of a document with the local court that puts parties interested in the property on notice that the party asserting the lien has a claim. States differ widely in the method and time within which a party may act on their lien. Also varying widely are the requirements of written notices between property owners, contractors, subcontractors and laborers, and in some cases lending institutions. As a general rule, these statutes serve to prevent unpleasant surprises by compelling parties who wish to assert their legal rights to put all parties who might be interested in the property on notice of a claim or the possibility of a claim. This by no means constitutes a complete discussion of construction lien law and should not be interpreted as such. Parties seeking to know more about construction laws in their State should always consult their State statutes directly.
Who can file a lien in this State?
Any person who performs or furnishes labor or professional design or surveying services or furnishes materials or furnishes rental equipment pursuant to a contract, either express or implied, with the owner of real property for the making of an improvement thereon shall, upon complying with the provisions of this Article, have a lien on such real property to secure payment of all debts owing for labor done or professional design or surveying services or material furnished or equipment rented pursuant to such contract.
How long does a party have to file a lien?
Claims of lien may be filed at any time after the maturity of the obligation secured thereby but not later than 120 days after the last furnishing of labor or materials at the site of the improvement by the person claiming the lien.
What kind of notice is required prior to filing a lien?
Subcontractors are required to provide the obligor with a Notice to Obligor. this notice is slightly different depending on whether the party issuing the notice is a first, second, or third tier subcontractor, or is more remote.
How long is a lien good for?
An action to enforce the lien created by this Article may be instituted in any county in which the lien is filed. No such action may be commenced later than 180 days after the last furnishing of labor or materials at the site of the improvement by the person claiming the lien.
Are liens assignable?
Yes. North Carolina law specifically permits the assigning of liens. When a claim of lien has been filed, it may be assigned of record by the lien claimant in a writing filed with the clerk of superior court who shall note said assignment in the margin of the judgment docket containing the claim of lien. Thereafter the assignee becomes the lien claimant of record.
Does this State require a notice prior to starting work, or after work has been completed?
No. North Carolina statutes do not require a Notice of Commencement or a Notice of Completion as in some other States.
Does this State permit a person with an interest in property to deny responsibility for improvements?
No. North Carolina statutes do not have a provision which permits the denial of responsibility for improvements.
Is a notice attesting to the satisfaction of a lien provided for or required?
No. North Carolina statutes do not provide for or require that a lien holder who has been paid produce or file a notice to that effect. However, two methods under which a lien may be discharged include an acknowledgment of satisfaction of lien which may be filed by either the lien claimant or the property owner with the lien claimant’s signature.
Does this State permit the use of a bond to release a lien?
Yes. Whenever a sum equal to the amount of the lien or liens claimed is deposited with the clerk of court, to be applied to the payment finally determined to be due, whereupon the clerk of superior court shall cancel the lien or liens of record.
Whenever a corporate surety bond, in a sum equal to one and one fourth times the amount of the lien or liens claimed and conditioned upon the payment of the amount finally determined to be due in satisfaction of said lien or liens, is deposited with the clerk of court, whereupon the clerk of superior court shall cancel the lien or liens of record.