NC Mechanic’s Liens (PART 1): The Original Rules & Requirements

Are you a contractor or subcontractor in Asheville or Western North Carolina who has not been paid for your services? Forrest P. Merithew, Attorney at Law, works in construction law to represent contractors, subcontractors, and homeowners in a range of legal services, including, but not limited to, mechanic’s liens, contract drafting and review, insurance coverage and defense, and construction defect and other litigation matters.

While North Carolina has recently added several additional requirements and avenues for mechanic’s liens, the original rules and requirements are still applicable in most situations (Part 2 will provide the new rules and their application). Contractors, subcontractors, and suppliers who provide materials and/or preform work and services on real property under a contract and are not paid for that work are eligible to put a mechanic’s lien on the improved real property in order to secure payment. A mechanic’s lien allows general contractors, subcontractors, and suppliers that have provided labor or materials for the improvement of real property to claim an interest in that property to secure payment. The important part of securing a mechanic’s lien is to be aware of and meet the deadlines required to properly secure and file the lien.

To establish or perfect a mechanic’s lien in North Carolina two time-sensitive steps must be taken. First, the lien must be perfect (filed and mailed) within 120 days of the last date the claimant furnished labor and/or materials to the project. Second, the lawsuit to enforce the mechanic’s lien must be commenced within 180 days of that same “last date.” The priority of the contractor’s lien, versus other potential liens on the property, relates back to the first date the contractor furnished labor or materials to the property. The new amendments discussed in Part 2 (“New Amendments in North Carolina”) do not change these deadlines and rights, but additional levels of requirements for certain size projects, and perfecting liens to establish notice to other interested or creditor parties.

Subcontractors maintain the right to assert a lien upon funds and potentially a lien on the real property. A subcontractor can serve upon the contractor and owner a “Notice of Claim of Lien Upon Funds.” If money is owed from the owner to the contractor and from the contractor to the subcontractor, then service of the Notice of Claim of Lien Upon Funds creates a secured interest in favor of the subcontractor claimant against that owed money. Then, if any party higher in the chain of funds for disbursement ignores the subcontractor claimant’s Notice, then that party becomes directly liable to the subcontractor claimant in the amount of the wrongful payment. Furthermore, to the extent the subcontractor has a valid lien upon funds held by the owner, the subcontractor may be able to assert a lien against the owner of the Real Property for those funds that are available to the contractor.

Because lien law requirements and deadlines are specific, a mechanic’s lien may become invalid if the claimant contractor or supplier fails to follow them. The mechanic’s lien requirements also provide protections for homeowners. If the deadlines pass without action on the lien filer’s part, then a homeowner can request that the claimant release the lien, freeing the real property title. If the lien filer fails to comply with the request, then the homeowner can take legal action to have the mechanic’s lien removed. It may be important for parties on both sides of a potential mechanic’s lien issue to consult with an attorney to ensure that the proper steps are being taking to protect that respective party’s rights.

Contact Forrest P. Merithew, Attorney at Law, if you are a contactor or subcontract that needs to file a mechanic’s lien or you are a homeowner facing one.

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