Entries in lien agent (9)


Lien Law Update: Lien Agent Statutes up for Proposed Revision

Thanks to Connie Wilson for the heads-up...

Senate Bill 602 was filed today.  The bill proposes to make the first significant revisions to the lien agent statutes since they were implemented five years ago.  The stated goal of the bill is to provide for the cancellation of notices to lien agent.

The proposal is positive in the sense that it is entirely permissive.  All of the amendments dealing with cancellation of a notice to lien agent provide that the potential lien claimant "may" deliver a cancellation, and there is no requirement that a potential lien claimant "must" do so.  (As a practitioner's note, the bill uses the term "file" inaccurately, since notices are not filed with the court, but rather are delivered to a title insurer / lien agent.)

However, the fact that the cancellation provisions are permissive does not mean the bill is perfect.  There is language in proposed section 44A-11.2(s) discussing the effect of a cancellation in the event a contractor delivers a subsequent notice.  Under the bill, the new notice "would not relate back to or renew the cancelled filing."  As it is, notices to lien agent automatically "relate back" to the beginning of a project provided there has not been a sale or refinancing of the property.  The same should be true for a new notice -- either the notice is timely with respect to a given sale or refinancing, or it is not.  So subsection (s) needs to clarify that it is in relation to such an event, rather than implying that the effect of a notice is somehow limited in time.

New proposed subsection (t) also suffers from loose language.  The new subsection would automatically cancel a notice after five years "if not cancelled or renewed pursuant to the procedures described in this section."  However, there is no provision for renewal of a notice under current law.  This would need to be cleaned up, or else a new provision for renewing notices will need to be added.

Finally, the bill provides for amending the permitted fee for a designation of lien agent from $25 to $30 for a residential (one- or two-family dwelling) project, and from $50 to $58 for any other project.  Given that the bill's stated intention is to allow for cancellation of notices to lien agent, the cost increase -- which will likely be passed along to the general public -- should be justified at a minimum. 

Watch this space for further developments regarding this bill.



Lien Law Update: Revisions Bills Move Forward

House Bill 1101 (the Pete Wall fix) and House Bill 1102 (technical corrections to lien agent requirements) were favorably reported from the House Judiciary C subcommittee this morning.  There was no controversy as to either reported bill, nor with an amendment offered to HB 1101 to clarify that the payment bond requirements would apply even for buildings not intended to be used or ultimately owned by the public entity.


Lien Agent Report: Heard from the Field

At yesterday's Judiciary subcommittee meeting, there was a class reunion-type feel, since the various attorneys and lobbyists working on the lien law revisions during the 2012 session and the 2013 session for HB 180 were nearly all present for the just-in-case observation on HB 88.  Before and after the hearing, I took the time to speak with some of them to see if they had heard any reports about how the lien agent requirements were playing out.  So far, the only place the bill really touches contractors is at the inspections offices, during the permit application process.

On that front, I spoke with Lisa Martin from the NC Home Builders Association.  She told me that some of her members were reporting on a long-running problem of unlicensed contractors using a homeowner or potential homeowner to pull permits.  Under Chapter 87 of the NC General Statutes, a "person, firm, or corporation" does not need to be licensed as a general contractor for the purpose of constructing or altering a building on land owned by that person, firm, or corporation, provided the building is intended solely for occupancy by that person and his family, firm, or corporation after completion, and the person, firm, or corporation complies with the permitting requirements under NCGS 87‑14.  Those same unlicensed contractors appear to have believed wrongly that using the homeowner or buyer could circumvent the lien agent requirements also.

However, as Lisa and I agreed, the text of the statutes doesn't agree with that avoidance technique.  While it is true that (1) projects under $30,000 don't need a lien agent (OR a GC license), and (2) renovations of a single-family residence where the owner lives in the residence don't need a lien agent -- whether or not the owner or the contractor pulls the permit, as the PCS for HB 88 was intended to clarify -- there is no exception stating that a lien agent is not needed where the owner or buyer serves as the "general contractor" for the purpose of pulling permits.  Lisa asked that I highlight this issue, because anything that keeps unlicensed contractors from circumventing the licensure and permitting statutes is good for the industry, as well as for the consumers.

Thank you for the input, Lisa! 


Lien Law Updates: H180 Signed; April 1 is here

Two updates on April 1:

1.  Gov. McCrory signed HB 180 last Friday, and the provisions become effective today.

2.  The liensnc.com website is live.  The requirement of appointing a lien agent applies today for new projects.  The requirement of giving notice to the lien agent for those new projects also applies as of today.


Lien Law Update: Title Insurers Publish Instructions for Lien Agent Procedures

Late on Wednesday (03/27), the attorney for the title insurance industry circulated an e-mail to the various stakeholder representatives, as well as to Rep. Stevens and Bill Patterson.  This e-mail included three attachments explaining how to comply with various aspects of the new lien agent requirements, which go into effect on Monday (April 1).

1.  Appointing a Lien Agent:

According to the instructions, the easiest way to get a lien agent will be to go to the liensnc.com website, and hiring one online.  We have been told in demo presentations that the website will permit online payment of the statutory fee of $25 per lot for a one- or two-family residential lot, or $50 per lot for any other project.

2.  Permitting:

The instructions, which are specifically intended for permitting offices, explain that an owner (or a contractor, on the owner's behalf) is required to appoint a lien agent when first contracting for improvements to real property, unless the project falls within one of four exceptions.  (Those listed exceptions are projects under $30,000, existing single-family residences used by the owner as a residence, projects with the first furnishing prior to April 1, 2013, and public projects.)

3.  Giving notice to the Lien Agent:

This is the step that matters most to vast majority of participants in a construction project, since this is the one that determines whether or not you have preserved your lien rights against a sale or refinancing of the property.  According to the instructions, again the title insurers are urging users to go to the liensnc.com website.  As one of the statutory alternatives, they have stated that a notice can be e-mailed to support@liensnc.com, but you will still need to set up your e-mail for delivery receipt.

I don't normally use this blog as a specific advertisement for me, for Safran Law Offices, or for legal services generally, but on this issue, I don't think it can be stated strongly enough...  If you have ANY confusion as to what to do when it comes to preserving your lien rights as of Monday, April 1, 2013, call us (919-828-1396 or 800-326-3372), or write me, or else contact your own construction lawyer.  The lien agent requirement is the most dramatic restriction upon contractor lien rights in at least the past two decades in North Carolina, and getting it right may mean the difference between getting paid and getting nothing for your work.