The Lien Agent: What the Subcontractor Needs to Know
By: Gregory L. Shelton
Shelton Law Carolinas
North Carolina’s new lien agent law takes effect on April 1, 2013. Having already covered what the owner needs to know, we now turn to the subcontractors and suppliers who will be present on the project site. (Suppliers not present on the project site will be covered in a later post.)
The lien agent provisions constitute a new layer of procedures under chapter 44A. Thus, the existing procedural steps and methods (notice of contract, notice of subcontract, notice of claim of lien upon funds, and claim of lien upon real property) should continue to be observed by everyone.
Step One: Obtain contact information of lien agent
Beginning April 1, owners must designate a lien agent for most residential and commercial construction projects where the cost of the improvements equals or exceeds $30,000. If the owner follows the law, the identity and contact information of the lien agent will be located within the body of the building permit or on a sign posted conspicuously and continuously on the project.
If the owner has not posted contact information of the lien agent at the project site as required, you should send the owner a written request for the lien agent’s contact information. The owner is required to provide you with the lien agent’s contact information within seven (7) days of receiving your written request. The owner must provide you with the contact information using the same method that you used in making the request. For example, if you fax a request to the owner, the owner must fax the lien agent contact information to you.
Step Two: Serve your “Notice to Lien Agent” on the project’s lien agent
To fully protect your lien rights, you must send your “Notice to Lien Agent” to the lien agent chosen by the owner within 15 days of your first furnishing of labor or materals. If you forget or otherwise fail to send your “Notice to Lien Agent” within 15 days, don’t panic. Your lien rights will remain intact as long as you send your “Notice to Lien Agent” before the property is sold or refinanced. Think of the 15 day window as a safe harbor where your lien rights are protected even if the project is sold or refinanced before you give your Notice to Lien Agent. The 15 day safe harbor will be particularly helpful to trades who begin work at the tail end of the project.
A. For projects where lien agent is designated through www.LiensNC.Com
In most cases, the owner will make things easy on itself and select the lien agent through www.LiensNC.com, a website established by members of title insurance industry. This website is an efficient and relatively easy way for everyone to abide by the lien agent requirements.
If the owner has designated the lien agent through the lien agent website www.LiensNC.Com (site will go online on April 1, 2013), navigate to the “Notice to Lien Agent Link” and fill in the information requested. If your cell phone has a QR app, you can navigate directly to the project using the QR code on the lien agent information posted by the owner. If no QR code is posted, write down or take a photograph of the lien agent information, log on to www.LiensNC.com, and provide your information.
You will want proof that you provided your “Notice to Lien Agent” information on the website. Print out and save the receipt provided by the website.
B. For projects where lien agent is not designated through the website
1. Preparation of Notice to Lien Agent form
If the owner has not obtained a lien agent through www.LiensNC.com, you must send the “Notice to Lien Agent” to the lien agent by must include:
1. Name, mailing address, telephone number, fax number (if available), email address (if available), and website address (if available).
2. Name of party with whom contracted.
3. Description of the real property improved; and
4. Notice of rights’ statement.
A form “Notice to Lien Agent” is available at my firm’s website by clicking here. (Users of this form are responsible for the accuracy and completeness of filings in accordance with article 2 of chapter 44A of the North Carolina General Statutes. Seek legal advice from a licensed attorney.)
2. Proper service (delivery) of Notice to Lien Agent form
Once you’ve prepared and signed the Notice to Lien Agent form, you must serve it on lien agent by one of the following methods of service:
- Certified mail, return receipt requested
- Signature confirmation as provided by US Postal Service
- Physical delivery and obtaining a delivery receipt from the lien agent
- Fax with fax confirmation page
- Depositing with a designated delivery service such as FedEx, UPS, DHL
- Electronic mail (email), with a delivery receipt
Each of these statutory methods of service contemplate that the subcontractor will obtain some form of proof of delivery, thus eliminating situations where the lien agent claims that it never received the “Notice to Lien Agent.”
Finally, if you submitted your information through www.LiensNC.com, service on the lien agent is automatic. Thus, subcontractors using www.LiensNC.com don’t have to type up and send a “Notice to Lien Agent” by the other methods listed above (mail, fax, UPS, etc.).
Step Three: Provide off-site lower tier subcontractor or supplier with lien agent contact information
General contractors and subcontractors often enter agreements with entities that will furnish labor or materials (usually materials) to the project but who will never step foot on the project site to see the building permit or lien agent contact information. To solve this conundrum, the new lien agent law requires the on-site contractor or subcontractor to provide its off-site lower tier suppliers written notice of the lien contact information within three business days of contracting with that lower tier. When possible or economically feasible, prudent suppliers should request the lien agent information when the purchase order is issued.
wikicommons photo attribution: Marianna