Mechanics’ liens are a critical tool for construction professionals in North Carolina, helping ensure payment for labor or materials provided. But with specific rules and deadlines, getting it right is essential. Here’s a breakdown of what you need to know:
1. Know the Two Types of Mechanics’ Liens in North Carolina
North Carolina law allows for two types of mechanics’ liens:
- Liens on Real Property: This type of lien creates a legal claim on the property where work was performed or materials were supplied. It can prevent the sale or refinancing of the property and may even allow for foreclosure if payment is not made.
- Liens on Funds: This type of lien places a claim on the funds held by the property owner, securing payment even if the property itself isn’t at risk.
2. Who Can File a Mechanics’ Lien on Real Property?
In North Carolina, contractors, subcontractors, and material suppliers can file a lien if they’ve provided labor or materials that improve the property. Even certain lower-tier subcontractors can file liens, but they must follow additional procedures. Important: Laborers working directly for a contractor cannot file liens themselves; they are covered through the contractor’s lien.
3. Understand Preliminary Notice Requirements
In many instances, contractors, suppliers, and subcontractors that want to preserve their lien rights must serve a Notice to Lien Agent early in the construction process. North Carolina law requires that property owners appoint a lien agent for any project valued at $30,000 or more. This notice must be sent to the lien agent within 15 days of starting work or delivering materials. Missing this deadline could result in a loss of lien rights later on.
4. Keep Detailed Documentation
Accurate record-keeping is key for protecting your lien rights and will support the legitimacy of any lien claims. Make sure to document:
- The date work commenced or materials were first supplied
- The date work was last performed or materials were last supplied
- A description of the location of the real property being improved
- The labor performed
- Materials supplied
5. File Your Lien on Time
Timing is everything when it comes to mechanics’ liens in North Carolina. Here’s what you need to know:
- You must file your lien within 120 days of the last day labor or materials were provided.
- If the lien is still unpaid, you have 180 days from the last date of work to file a lawsuit enforcing the lien. Missing these deadlines means losing your lien rights, no matter how valid your claim may be.
6. Follow Proper Filing Procedures
Mechanics’ liens must be filed with the Clerk of Court in the county where the property is located. The lien must include key information such as:
- The name of the property owner.
- The name of the contractor, subcontractor, or supplier filing the lien.
- A description of the property.
- The date labor or materials was first provided
- The date labor or material was last provided.
- A statement of the labor or materials provided and the amount owed
After filing, make sure to send a copy to the property owner to ensure everyone is aware of the lien.
7. Understand the Claim of Lien on Funds
North Carolina has a process called a Claim of Lien on Funds, which allows subcontractors to assert a lien on any funds owed to the general contractor. This is particularly helpful if you do not have a direct contract with the property owner, ensuring your payment is protected. Unlike real property liens, this claim only attaches to funds, not the property itself.
8. Enforcement Lawsuits
After filing a lien on real property or providing notice of a lien on funds, it’s often necessary to file an enforcement lawsuit to enforce the lien. For real property liens, the lawsuit must be filed within 180 days from the last date labor or materials were provided. While liens on funds don’t have the same strict deadline, other time limits and statutes of limitation still apply.
9. Release the Lien When Paid
Once you’ve been paid, don’t forget to release the lien! North Carolina law requires you to file a lien release with the same office where the original lien was recorded. Failing to release a lien after payment can lead to fines or legal consequences.
10. Consult Legal Expertise
Mechanics’ liens come with many legal requirements and deadlines. Even minor mistakes can lead to the loss of lien rights. To ensure accuracy and compliance, consider consulting a North Carolina-based construction attorney who can help you navigate the process.
We are here to help answer your mechanics’ lien questions! Just reach out at https://www.andersonlegalnc.com/.
Nothing on this website or this blog should be considered legal advice. Anderson Legal does notrepresent you and no client-attorney relationship is formed until you have completed our clientintake process.
