The North Carolina Mechanics Lien Law provides more visibility to parties providing work on a construction project. Before April 1, 2013, there was no clearly defined way to determine which parties performed work on a construction project outside of asking the contractor (and taking their word for it), or finding a claim of lien and/or judgment filed at the courthouse by a subcontractor.
The new law allows title insurance companies, attorneys, lenders, owners, inspectors, contractors, and subcontractors to view and track any construction projects by login to LiensNC.com. This website shows the owner/contractor of a project and will list any subcontractors who have provided work or materials on the project.
A property owner, or a contractor on behalf of the owner, is required to appoint a lien agent when a construction project is contracted, except in the following situations.
A lien agent does not need to be appointed if:
- the cost of the improvement does not exceed $30,000.00;
- the construction concerns the owner’s existing residence; or
- the construction involves public building projects.
Step-by-step instructions on how to appoint a lien agent are available in the “Guide” section on the LiensNC.com website. The owner begins by creating an account. The process is rather simple and requires a $25-$50 fee to appoint the agent. Once the owner has appointed a lien agent on LiensNC.com, the owner will be provided a certificate to be printed. This certificate needs to be on display at the construction site and provided to any subcontractor in need of a permit. A copy of the certificate will be required before a permit is issued.
Once appointed, the lien agent serves as a point of reference for a project. When labor and/or materials are provided on a project, the subcontractor signs up as a “potential lien claimant” to the lien agent. This identifies that work has been performed on a project, by whom it has been performed, and correctly identifies that the subcontractor could potentially file a claim of lien if they are not paid in a timely manner. Signing up as a potential lien claimant does not indicate that a subcontractor has or will make a claim of lien.
The new lien law tries to exempt the average homeowner’s construction project, but the law does not specifically address collectively owned property such as common areas. In the event of construction projects affecting common areas, the association is required to file as an owner unless a contractor is willing to appoint an agent on behalf of the association. This poses a particularly interesting issue with condominiums, where the common area is owned collectively by the unit owners and not by the association itself. In the event of a condominium, it would be illogical for each owner to independently appoint a lien agent for the construction project. Here, the condominium association which provides common area maintenance and repairs on behalf of the owners would apply for the appointment of a lien agent.
For further information, contact a lawyer.