North Carolina Mechanics Liens: An Overview

North Carolina’s Claim of Lien on Real Property statute — N.C.G.S. § 44A-7 through § 44A-23 — gives contractors, subcontractors, sub-subcontractors, and materialmen who improve real property a security interest in that property to secure payment for their work and materials. Properly perfected, a mechanics lien can force the sale of the property to satisfy unpaid obligations, even over the owner’s objection.

Who Can File a Lien?

The statute distinguishes between first-tier claimants (those with a direct contract with the owner) and second-tier and lower-tier claimants (subcontractors, sub-subcontractors, and suppliers without a direct owner contract):

• First-tier (direct contractors): Have a direct lien right against the owner’s property and may also pursue a lien on funds owed to the general contractor.
• Second-tier and lower (subcontractors, suppliers): Must serve a Notice to Lien Agent before or during the project (if a lien agent was designated — required on projects over $30,000) and may pursue a “lien on funds” claim against the GC in addition to a property lien.

Key Deadlines Under § 44A

Lien rights are strictly tied to statutory deadlines. Missing them permanently eliminates the right to a lien:

• File the Claim of Lien: Within 120 days of the last date the claimant furnished labor, services, or materials to the project. The claim is filed with the Clerk of Superior Court in the county where the property is located.
• Commence the lien enforcement action: Within 180 days of the last furnishing date. Filing the lien alone is not enough — you must also file a lawsuit to enforce it within 180 days.
• Notice to Lien Agent (sub-tier claimants): Must be served during the course of work; you generally cannot serve notice after work is complete and expect lien protection.

Lien on Funds

In addition to a property lien, sub-tier claimants can pursue a lien on funds — attaching the money owed by the owner to the general contractor (or by the GC to a subcontractor) at the time of service. The lien on funds requires proper service and creates a direct obligation on the party holding funds to pay the claimant rather than passing the money up the chain. This can be an effective tool even when the property itself is already encumbered by a senior mortgage.

Owner’s Defenses

Common defenses raised against lien claims include: the work was defective or incomplete; the lien was filed after the deadline; the claimant did not have a proper written contract as required by statute; the lien was not perfected within 180 days; or the property is the claimant’s principal residence (exempt in some circumstances). We defend property owners against improper liens as well as pursuing claims for contractors.

How We Can Help

Sherrill & Cameron represents contractors, subcontractors, materialmen, and property owners in lien matters throughout Rowan County and the surrounding region:

• Timely preparation and filing of Claims of Lien on Real Property
• Lien enforcement actions (complaint to enforce lien)
• Lien on funds claims and enforcement
• Defending property owners against disputed or improper liens
• Recovery of payment through negotiation, mediation, and litigation
• Construction contract disputes underlying lien claims