Carolina Construction Law

Liens and Atttorney Fees

Last month, in the case of Terry's Floor Covering v. Crown General, the NC Court of Appeals held that a subcontractor was entitled to an award of $17,000 from an owner who had unreasonably refused to pay the subcontractor $7,000 for work performed.  The subcontractor filed a subrogation lien under NCGS 44A-23 against the owner's property.  The owner owed the general contractor, who hired the sub, over $10,000 in retainage. 

If the property has been sold, can a subcontractor still lien it?

In North Carolina, the answer is yes.  As long as the subcontractor has filed his lien within 120 days of the last furnishing of labor or material, the subcontractor can still lien the property through NCGS 44a-23.  This statute is actually intended for contractors, but subcontractors can not use this statute by virtue of their right to subrogation to the general contractor's lien.  A contractor is supposed to provide a buyer with a lien affidavit or waiver at closing indicating that all subs have been paid.  If you are a homeowner who has received a "surprise" lien, you should contact an attorney and perhaps your title insurance company.  The issue remains as to whether the land can be sold to pay the contractor.  Many times that answer turns on what money might still be owed to the contractor.

What is the time period for filing a lien?

In North Carolina, if a contractor, subcontractor, laborer or materials provider has not been paid, they have the right to file a lien.  A lien is a claim against either someone’s property or against money that someone is owed.  In North Carolina, a person has 120 days from the last day they either worked or provided material to the job site.  Filing a lien places other people on notice that you are not getting paid and protects your rights to recover before other people are paid.  If gives you a priority when money is disbursed on the project. Filing a claim of lien is only one step in the process.  Once a lien is filed, you must “perfect” the lien by filing a lawsuit to enforce the lien.  While you have 120 days to file a lien from the date you were last on the job or provided materials – you have 180 days from those events to file a lawsuit to enforce the lien.  If you fail to file the lawsuit within 180 days, you still have three years from the date you were owed the money to file a lawsuit to collect your money.  However, you will have lost your priority to get paid before everyone else if the lien is not filed or perfected.