All contractors, subcontractors and design professionals need to know how and when to assert their lien rights to increase the likelihood of being paid for their work. A valid lien is often the only difference between getting paid in full and not getting paid at all.
When a contractor, subcontractor or design professional performs work or supplies materials, a lien secures their right to be paid for their work. Banks know the value of securing payment and would never loan money without filing a mortgage lien or deed of trust to secure payment. Similarly, contractors and design professionals need to preserve their lien rights and file liens when appropriate. Specific notice, recording, and foreclosure procedures set out in the North Carolina and South Carolina statutes must be strictly followed. In exchange for following these procedures, a lien claimant can gain the following benefits:
- A lien can attach to the property where materials were delivered or where construction took place. This is powerful because it can cause a court to direct that the property be sold to satisfy the lien. Importantly, filing a lien can mean that your claim is paid before a mortgage (or judgment) that is later attached to the property because a lien can relate back to when work started on the project. Who gets paid when a property is sold may come down to who properly filed a lien and who did not.
- A lien claimant can recover their attorneys’ fees spent in a lawsuit filed to recover payment on the lien.
- Where a subcontractor gives notice of a claim of lien, the owner must retain sufficient funds to cover the lien. If the owner fails to do so, then they will become personally liable to the subcontractor.
In North Carolina, lien claims must be filed in the clerk of court where the property is located within 120 days (only 90 days in South Carolina) of the lien claimant’s last date of furnishing labor, materials or services. To enforce the lien a lawsuit must then also be filed within 180 days (six months in South Carolina) of a lien claimant’s last date of furnishing labor, materials or services. If you miss the filing deadline by just one day, you lose your lien rights.
When it comes to properly filing a valid lien, legal knowledge is not only power, it’s a necessity. The attorneys at Skufca Law have the expertise and knowledge you need to properly file liens in North and South Carolina to secure full payment.
Please contact us for more information.