• North Carolina is an UNPAID BALANCE lien state.
• Private Projects Effective April 1, 2013:  

"The North Carolina Mechanic's Lien Agent Statute (S42) applies to all construction projects

o   Except improvements to existing residential dwellings

o   Except any project less than thirty thousand dollars ($30,000).

Mechanic's Lien Agent

o   The owner must provide MLA information within 7 days to any potential lien clamant that sends a written request by certified mail

o   General contractors and subcontractors must provide material suppliers that DO NOT supply labor on the project a written notice containing lien agent information within 3 days of contracting with the material supplier,

o   Suppliers should then provide Notice to the MLA within 15 days of the first deliveries of labor or material to the project." - Thank you to James D. Fullerton, Esq.

Private Projects effectve  1/1/13

• File and serve owner and prime contractor within 120 days of last furnishing.

Notice Speed Bumps

• The prime contractor may post and file a Notice of Contract.
  • If a Notice of Contract is filed by a prime contractor, the Subcontractor/Supplier must file a Notice of Subcontract to protect their interests.
  • The Notice of Subcontract identifies the lower tier Subcontractor, who otherwise might remain unknown to the Contractor, and the Contractor then becomes obligated to notify that lower tier subcontractor or supplier within five days after the Contractor makes a payment to the first tier sub.
  • If the contractor notifies the subcontractor within five days of each payment made, then the subcontractor’s Lien right is permanently extinguished.
• A Notice of Subcontract can be serviced prior to the furnishing of services or materials or anytime thereafter. However, the Contractor is only required to notify the lower tier subcontractor/supplier on any payments after receiving the Notice of Subcontract

Mechanic’s Lien Speed Bumps

• As of 2013, lien claimants must file their claim with the owner of the property, and with the general contractor if the claimant is a subcontractor, in addition to having to file this claim with the office of the clerk of superior court of the county wherein the relevant property is located.
• Under the doctrine of “relation back,” a contractor’s Claim of Lien on Real Property becomes effective on the date that labor or materials were first furnished to the project.
• Improvement Lien of Funds Speed Bumps
  Upon receipt of the notice of claim of lien upon funds, the obligor shall be under a duty to retain any funds subject to the lien or liens upon funds up to the total amount of such liens upon funds as to which notices of claims of lien upon funds have been received.

Lien on Funds Speed Bumps

• There is no statutory time limit for serving a Notice of Claim of Lien Upon Funds; obviously, if the funds have been paid before the Notice of Claim of Lien Upon Funds is served, then there will be no funds to which the lien can attach
• Subcontractors/suppliers lower than third tier are only entitled to a Notice of Claim of Lien Upon Funds.

• Gov. Mike Easley of North Carolina signed into a law a bill (S.B. 1245) that prohibits retainage on public projects under $100,000 and limits retainage to 5 percent on other public construction projects. The new law, Effective Jan. 1, 2008, also requires the full release of retainage within 60 days of substantial completion or occupancy, whichever occurs first.
• Tier requirements are somewhat vague.  Therefore, it is conceivable that regardless of how remote they are, any contractor and material supplier could maintain a claim.
• Every “Contractor” (i.e. general contractor, prime contractor), etc. that provides at least $50,000 worth of improvements is required to post a performance and payment bond.