By Attorney Edward Jesson
Most people in the construction industry are at least partially familiar with the Mechanic’s Lien statutes in North Carolina. For those that are not familiar with them, you can always get a refresher from our previous article, “Construction Liens 101”. While most people understand that a general contractor, or sub-contractor, or a sub sub-contractor (and so on) may generally be entitled to at least some sort of lien on property if they are not paid, most people are surprised to learn that contractors aren’t the only ones entitled to a lien.
The applicable North Carolina statute states that:
Any person who performs or furnishes labor or professional design or surveying services or furnishes material or furnishes rental equipment pursuant to a contract, either express or implied, with the owner or real property for the making of an improvement thereon shall, upon complying with the processions of this Article, have a right to file a claim of lien on real property . . . .
As you can see, the definition of persons who can claim a mechanic’s lien is broad and is not just limited to those actually performing construction work. Those who provide materials (e.g. concrete suppliers, lumber suppliers) are entitled to mechanic’s liens if they do not receive payment. Likewise, those who provide rental equipment can file mechanic’s liens if they do not receive payment. This can be especially troubling for a general contractor, as often, the material suppliers and rental equipment businesses are several rungs down the contractual ladder from the general contractor or owner.
Similarly, those who provide professional design or surveying services are entitled to a mechanic’s lien if they don’t receive payment. North Carolina law provides that design services encompasses both architects and engineers.
Of course, not everyone involved in a construction project is entitled to a direct lien on the real property: only those who have a contract with the owner of the real property are entitled to a direct lien (subject to limited exceptions). Those further down the contractual chain are generally only going to be entitled to a subrogated lien (again, subject to certain exceptions).
It is incredibly important when involved in any construction project, whether you’re on the owner’s side or the construction/design side, to make sure that everyone down the chain is getting paid for the work that they are performing. Even if a supplier of a sub-sub-contractor doesn’t get paid, that can cause costly legal issues should they seek to file a lien at a later date. The attorneys at Jesson & Rains can assist if liens are filed and protect against liens being filed in the first place. Please give us a call if you need assistance!
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Kelly Rains Jesson