North Carolina’s New Lien Laws: The Basics

Kerri Sigler Former Partner at Wait Law, P.L.L.C.


SENDING A NOTICE TO LIEN AGENT: WHEN, WHERE, AND HOW

As of April 1, 2013, North Carolina’s new construction lien laws kick in for all construction projects whose total cost is more than $30,000.00 or to projects unrelated to existing, owner-occupied single-family residences (e.g., remodeling). N.C. Gen. Stat. 44A-11.1. These new construction laws revolve around Lien Agents (see previous post) and what you, as a contractor or subcontractor, need to do to protect your rights under the new laws.

SEND A NOTICE TO LIEN AGENT WITHIN 15 DAYS. As of April 1st, contractors and subs must send a Notice to Lien Agent within 15 days of first furnishing of labor or materials. A Notice to Lien Agent should look like this under N.C. Gen. Stat. 44A-11.2(i):

 

NOTICE TO LIEN AGENT

(1) Potential lien claimant’s name, mailing address, telephone number, fax number (if available), and electronic mailing address (if available):

 

(2) Name of the party with whom the potential lien claimant has contracted to improve the real property described below:

 

(3) A description of the real property sufficient to identify the real property, such as the name of the project, if applicable, the physical address as shown on the building permit or notice received from the owner:

 

(4) I give notice of my right subsequently to pursue a claim of lien for improvements to the real property described in this notice.

 

Dated: __________

 

/s/__________________________

(Potential Lien Claimant)

 

SEND IT CERTIFIED. A Notice to Lien Agent must be sent by some method that generates a receipt. N.C. Gen. Stat. 44A-11.2(f). In other words, you need to be able to prove it arrived. Although certified mail is not absolutely required, it is the easiest way to generate a receipt. The full list of acceptable methods is:

(1) Certified mail, return receipt requested;

(2) Signature confirmation as provided by the United States Postal Service;

(3) Physical delivery and obtaining a delivery receipt from the lien agent;

(4) Facsimile with a facsimile confirmation;

(5) Depositing with a designated delivery service authorized pursuant to 26 U.S.C. § 7502(f)(2); and

(6) Electronic mail, with delivery receipt.

As used in this subsection, “delivery receipt” includes an electronic or facsimile confirmation. A return receipt or other receipt showing delivery of the notice to the addressee or written evidence that such notice was delivered by the postal service or other carrier to but not accepted by the addressee shall be prima facie evidence of receipt.

 

WHO IS MY LIEN AGENT? Once designated, the name and contact information of the Lien Agent must be listed on the Building Permit, and the Building Permit must be conspicuously and continuously posted on the property until all work is finished. N.C. Gen. Stat. 44A-11.2(e). So, technically, finding the Lien Agent should be as simple as finding the Building Permit.

If that fails, you can request the information from the owner. The information must be requested using one of the delivery methods listed above. An owner must provide the Lien Agent’s contact information to any potential lien claimant (contractor, sub, etc.) who requests it. N.C. Gen. Stat. 44A-11.2(b). The owner has 7 days to respond to a potential lien claimant’s request. Furthermore, the owner must provide the information to the potential lien claimant by the same delivery method it was requested. So, if a sub hand-delivers a request for the Lien Agent’s contact information (and obtains a receipt), the owner has 7 days to hand-deliver that information to the sub (and obtain a receipt).

 

NOTE: It is therefore a very good idea to clearly state the delivery method of the request, and the delivery method of the reply, at the top of the request/reply itself. For example:

 

April 15, 2013

REQUEST TO OWNER FOR LIEN AGENT CONTACT INFORMATION

VIA CERTIFIED MAIL

Bob Smith, Owner

1111 Smith Street

Winston-Salem, NC 27101

 

Dear Mr. Smith:

The undersigned [sub]contractor hereby requests that you, the owner of the subject property, provide the contact information for your designated Lien Agent for the project located at [PROJECT ADDRESS] pursuant to N.C. Gen. Stat. 44A-11.2(b).  Please provide the Lien Agent’s contact information by the same delivery method listed above within seven (7) days from the date of this Request.

 

/s/ _____________________, [sub]Contractor

[sub]Contractor

555 Project Blvd.

Winston-Salem, NC 27101

(336) 333-3333

 

 

WHAT IF I DON’T SEND A NOTICE TO LIEN AGENT?  As discussed in the prior post, it’s not necessarily the end of the world if you either do not send a Notice to Lien Agent, or do not send one within 15 days of beginning work.  However, you run a big risk by not doing so.  If you do not send a Notice to Lien Agent and thereafter file a Claim of Lien after the property has been sold, you lose your right to have a lien on the property.  If you do not file your Notice to Lien Agent and thereafter file a Claim of Lien after the property is refinanced, your lien will be in line behind the bank’s mortgage.

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