This website has previously discussed changes to certain parts of North Carolina’s lien statute which went into effect on April 1, 2013. This article explores in greater detail the Lien Agent requirement and provides general guidance on how to properly notify the lien agent of a potential lien claim. Every situation is different, however, so we encourage you to contact the experienced business attorneys at Richard L. Robertson and Associates, P.A. for reliable and practical advice.
Under the revised lien statute, any owner (or general contractor acting on behalf of the owner) must now appoint a “lien agent” “no later than the time the owner first contracts with any person to improve real property.” Every owner of real property, whether residential or commercial, must appoint a lien agent, unless:
- The cost of the project is estimated to be less than $30,000 at the time the original building permit is issued; or,
- The owner is making improvements to an existing single-family residential dwelling unit that is used by the owner as a residence.
The “lien agent” is a title insurance company or title insurance agent, registered with the North Carolina Department of Insurance, who is responsible to the owner to maintain a record of each notice of potential lien claim. This new requirement in the law was added primarily as a way to protect title insurance companies who have traditionally been forced to defend title insurance claims as a result of “hidden liens; ” that is, liens which arise from improvements to real property of which the owner has no notice. Appointing lien agents, like the filing of the notice to the lien agent, as discussed below, can be done by simply logging onto the new LiensNC website and selecting “Appointment of a Lien Agent.”
Once the owner selects a lien agent, the owner must identify the lien agent by providing notice on the building permit and/or posting it on the job site as well as providing notice through the LiensNC website.
Within fifteen (15) days of supplying materials, equipment or labor to a project, a supplier must provide a Notice to Lien Agent. This notice can be sent to the lien agent by certified US mail, or probably most efficiently, made electronically through the LiensNC website.
A lien claimant who fails to provide timely notice to the lien agent will have no lien rights against the real property should the property sell or be refinanced. Unless the property sells or is refinanced, however, a claimant who fails to file this notice will not be adversely affected. We recommend that in each case, our clients file a timely notice to lien agent to protect its lien rights.
Providing notice to the lien agent, however, is merely an additional step in the lien process. This notice alone does not take the place of the actual claim of lien which must be filed within 120 days of the final furnishing of labor and materials to a project. North Carolina courts have uniformly held that failing to file a proper claim of lien within the 120-day deadline is fatal to a supplier’s right to assert a lien against real property.
The experienced construction law attorneys at Richard L. Robertson and Associates, P.A. are prepared to assist our clients with the technical lien process from start to finish. Please do not hesitate to contact us to discuss how our lien services can ensure that your rights are protected.