When contractors supply labor and/or materials on a construction project in North Carolina, they are entitled to timely and proper payment of said labor and/or materials. If they are not properly paid, construction contractors have one of the most valuable recovery tools available: a mechanic’s lien. A mechanic’s lien can also be referred to as a construction lien. This type of lien provides the unpaid contractor with a security interest in the property itself.
North Carolina has specific rules and regulations in place for construction liens. Here, our construction law attorneys break down the key issues that you should know about regarding construction liens in North Carolina.
Background: What is a Construction Lien?
Simply stated, a construction lien is a legal claim against real property for payment of outstanding debts related to construction work, materials, or labor/services provided on the property. Construction liens are typically filed by contractors, subcontractors, suppliers, or other construction industry players who have performed work or provided materials for a construction project but have not received payment for the work performed or materials provided.
Who has the Right to File a Construction Lien in North Carolina?
Construction liens are governed by state law. In North Carolina, these liens fall under Article 2 of Chapter 44A of the North Carolina General Statutes. Under this Article, any contractor or subcontractor who performs or furnishes “labor or professional design or surveying services” or furnishes “materials” or “rental equipment” pursuant to a contract with the owner of real property for the purposes of improving that property has a right to file a claim of lien on real property to secure payment of all debts owing for the labor, services, or materials provided.
Summary: A contractor in North Carolina that performs any type of construction—whether commercial or residential—can pursue a construction lien for unpaid labor or materials.
Understanding the Mechanics of a Construction Lien
As previously discussed, a construction lien is a legal tool that contractors and subcontractors can use to secure their interests in real property. When a contractor performs work on a property and is not paid in full, they can file a lien against the property, which effectively gives them an encumbrance over the property, making it impossible for the property owner to sell it.
Know the Deadlines for North Carolina Construction Lien Laws
If you are working in the construction industry in North Carolina, you need to know the deadlines for pursuing a construction lien. The first important deadline to keep in mind is the preliminary notice deadline, which requires you to notify the lien agent within 15 days of the first furnishing of labor or materials. Failure to provide this notice could undermine lien rights. Notably, a lien agent is generally needed for work in excess of $30,000.
The second deadline to be aware of is the construction lien filing deadline, which requires you to file and serve your lien within 120 days of the last furnishing of labor or materials. It is imperative that contractors and subcontractors in North Carolina understand that this is a strict deadline. It generally cannot be extended; missing it will invalidate a lien.
Finally, the enforcement deadline requires you to initiate an action to enforce your lien within 180 days after your last furnishing of labor or materials. The sooner enforcement action is taken to address unpaid labor or materials, the better position a contractor will be in to protect its financial interests. Therefore, a proactive approach is always best with regard to enforcement of a construction lien.
A Property Owner May Challenge a Construction Lien
While contractors can file a construction lien on a property to secure payment for their work, it is also important to remember that property owners may challenge any lien. For example, a North Carolina property owner may try to argue that the contractor failed to provide adequate notice or that the lien was filed after the deadline. Alternatively, they may dispute the amount claimed in the lien or assert that the work performed was not satisfactory. A property owner may also attempt to assert that the lien is fraudulent or that the contractor did not have a valid contract for the work performed.
Contractors should be aware of these potential challenges and ensure that they comply with all legal requirements when filing a construction lien. A construction law attorney can help a contractor navigate the legal process for filing a construction lien and enforcement thereof.
Get Help From a Construction Lien Attorney in North Carolina
At Anderson Jones, PLLC, our North Carolina construction lawyers have extensive experience handling a wide range of construction lien cases. We are here as a legal resource if you have any questions about our state’s construction lien process or are interested in pursuing a construction lien for unpaid work.
Contact us today for a confidential consultation. Our attorneys handle construction lien cases throughout the State.