Mechanic’s liens (Construction liens) have long been a vital legal tool for contractors, subcontractors, and suppliers seeking payment for labor or materials provided to improve real property. In North Carolina, as in many states, this provides a way to secure unpaid debts by encumbering the property until payment is resolved. The relevance of mechanic’s liens is once again surging in 2025, driven by a combination of economic, legal, and market shifts. This contrasts notably with past downturns, particularly those of 2008 and 2020.
What is a Mechanic’s Lien?
A mechanic’s lien is a legal claim against real property for unpaid labor, services, or materials provided during construction or improvement. In North Carolina, the lien process is governed by Chapter 44A of the North Carolina General Statutes.
Key features of the North Carolina mechanic’s lien system:
- Who can file: General contractors, subcontractors, suppliers, and some design professionals.
- Timing: A Claim of Lien on Real Property must be filed within 120 days from the last furnishing of labor or materials.
- Enforcement: The lien must be enforced by filing a lawsuit within 180 days of the last date labor or materials were provided.
Why Mechanic’s Liens Matter More Now in 2025
1. Post-COVID Construction Boom and Contraction
After the initial recovery from the COVID-19 pandemic, the U.S. experienced a construction boom driven by federal infrastructure spending, private development, and a surge in residential construction. However, by 2024-2025, the construction industry began to cool due to inflation, rising interest rates, and tighter credit.
As projects stall and financing become less certain, many contractors and subcontractors experience delayed or withheld payments. Mechanic’s liens become the primary remedy for ensuring payment in a volatile market.
2. Increased Financial Stress in Commercial Real Estate
2025 is seeing a rise in economic uncertainty and financial distress for developers, particularly in commercial real estate and multifamily housing. In contrast to the 2008 crash, today’s issues stem more from rising operational costs (materials, labor, and higher interest rates) and less from toxic mortgage debt.
Mechanic’s liens serve as a frontline defense in insolvency scenarios, often placing claimants ahead of unsecured creditors.
3. Legal Technology and Enforcement Tools
Compared to 2008 or even 2020, lien claimants now have greater access to digital filing tools, public lien databases, and legal resources. This systemization of lien enforcement has increased the volume and precision of lien filings. Mechanic’s liens are now more accessible and enforceable, even for smaller subcontractors.
4. Labor Shortages and Payment Pressure
Labor shortages in the skilled trades have given workers and subcontractors more bargaining power—but also increased friction amongst owners, developers, and general contractors. When payments are delayed, the impact is felt quickly down the line. Mechanic’s liens are being used more aggressively to expediate and ensure final payments and retainage.
Lessons from Prior Economic Downturn
- The financial crisis of 2008 led to a massive collapse in property values, with countless projects abandoned. Mechanic’s liens became difficult to enforce, as properties lost value or entered foreclosure.
- The COVID-19 pandemic in 2020 brought abrupt shutdowns, supply chain delays, and workforce disruptions. However, strong federal stimulus and temporary economic freezes meant that widespread payment defaults were somewhat muted. Mechanic’s lien usage spiked but was also tempered by government relief programs.
In contrast, 2025 presents a slow-burn crisis. Payments are delayed, not stopped outright, and litigation is increasing. This environment is uniquely suited to lien enforcement, where timeliness and procedural accuracy can make the difference between getting paid or walking away with a loss.
Conclusion
In North Carolina, mechanic’s liens are vital in 2025. They are not just a legal backstop but an active part of construction finance strategy. As economic pressures mount, contractors and suppliers must understand and utilize their lien rights effectively.
The contrast with recessions in the past highlights the evolving role of mechanic’s liens: from a reactive tool in downturns to a proactive safeguard in today’s complex construction economy. For anyone involved in building in North Carolina, knowing the lien laws is not just smart, it’s essential.
Contact the attorneys at Skufca Law at 704.376.3030 to learn more about your lien rights and how to be prepared in today’s volatile economy.