Page 37 - State Law Summary of Mechanic's Lien Law

North Carolina NC

What is the statutory authority? See also N.C.G.S. § 44A-18 & 44A-19. In order for the subcontractor to perfect a
General Statutes of North Carolina, Chapter 44A, Article 2, Part 1, §§ 44A-7 to 44A- mechanic’s lien under this section, he must provide notice to the owner’s
23 designated lien agent pursuant to N.C.G.S. § 44A-11.2, give notice to the property
owner of his claim of lien on funds, and then file a claim of lien on funds in the office
What is the Attachment Date of the Mechanic’s Lien? of the clerk of superior court where the property is located within 120 days after
A mechanic’s lien takes effect from the time of the first furnishing of labor or the date of the contractor’s last furnishing of goods or services to the property.
materials at the site of improvement pursuant to either an express or implied N.C.G.S. § 44A-12. A claim of lien on funds may also be converted to a claim of lien
contract with the owner of the property. N.C.G.S. §§ 44A-8 and 44A-10. Notice on real property on failure of the owner to make payment after receipt of notice
should be filed with the designated lien agent via liensNC.com not later than 15 of a claim of lien on funds, irrespective of the tier of the subcontractor. N.C.G.S. §
days after the first furnishing. N.C.G.S. § 44A-11.2(l)(1). 44A-20.
What constitutes visible commencement of construction? What is the period of enforcement of a filed mechanic’s lien?
In the case of George v. Town of Edenton, 294 N.C. 661 (1978), the court held that In order to retain priority of its lien, the claimant must bring an action to enforce
partial clearing of the property and staking out the location of a building would the lien within 180 days after the date of last furnishing of labor or materials to
be enough to constitute visible commencement. There does not have to be visible the property. N.C.GS. § 44A-13. If a contractor timely files a claim of lien but fails
commencement for a mechanic’s lien to attach. to institute an action to enforce the lien within 180 days after the date of last
furnishing of goods and services to the property then the lien may be discharged
What is the priority of the insured construction mortgage/ of record. N.C.G.S. § 44A-16.
deed of trust?
A security instrument will have priority if no labor or materials have been furnished Is there a procedure to bond over the mechanic’s lien(s)?
to the real property pursuant to an express or implied contract, prior to the date of Yes. Pursuant to N.C.G.S. § 44A-16(a)(6) a bond in the sum equal to 1 1/4 times
recordation of the deed of trust. N.C.G.S. § 45-68(1b) provides that future advances the amount of the claim or claims of lien on real property claimed in the filing.
made under a security instrument that meets the requirements listed therein will Additionally, a sum equal to the amount of the claim or claims of lien on real
have the same priority as the original recorded instrument. Under North Carolina property may be deposited with the clerk of court, which will result in the clerk
lien law, a construction deed of trust will have priority over mechanic’s liens as long cancelling the lien of record. N.C.G.S. § 44A-16(5). For private development
as North Carolina Land Title Association (NCLTA) subordination and waiver forms contracts pursuant to N.C.G.S. § 143-128.1C, the private developer and surety may
are obtained from claimants that have filed notices with a statutorily appointed file jointly an affidavit stating that the amount of the penal sum of the payment
mechanic’s lien agent prior to the recording of the deed of trust. All appropriate bond minus amounts paid to claimants minus the amount of claims of lien on real
NCLTA forms must be collected to provide the insured deed of trust with priority property exceeds the amount claims by at least 125%. N.C.G.S. § 44A-16(c).
including the NCLTA Form 5, Owner Affidavit and Indemnity Agreement. In addition,
to ensure the seller’s conveyance to the insured owner and the insured lender’s Are the ALTA 32/33 Series Endorsements available for the Loan Policy?
deed of trust take priority over potential liens, NCLTA Form 6 (waiver and release Yes, however, these endorsements are not customarily issued in North Carolina.
of lien rights) from potential lien claimants with direct lien rights who have filed a
notice with the lien agent or are listed in paragraph 1.B of NCLTA Form 5 must be
collected. For priority solely for the insured lender’s deed of trust, NCLTA Form 7
(subordination of lien rights) from the same potential lien claimants must be
provided.

If priority of the insured mortgage/deed of trust is lost, is there a
statutory procedure to regain priority?
No.

When does a mechanic’s lien have to be filed for claimant to maintain
lien rights?
A claim of lien on real property is perfected upon serving a copy of the claim of
lien upon the record owner AND upon filing a claim of lien on real property in the
county where the property lies within 120 days after the date of the claimant’s
last furnishing of materials or labor to the property. N.C.G.S. §§ 44A-11 and 44A-12.
In order to perfect a mechanic’s lien, contractors must, provide notice to the
owner’s designated lien agent pursuant to N.C.G.S. § 44A-11.2, serve a copy of the
claim of lien on real property upon the record owner and within 120 days of the
contractor’s last furnishing of labor or materials to the property, file a claim of lien
on real property in the office of the clerk of superior court in the county where the
property is located. N.C.G.S. § 44A-12.

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