North Carolina claim of lien on real property, free and word for word from G.S. 44A-12

The sheet cannot be amended, which changes how you fill it in

Most lien statutes let you correct a filing. North Carolina does not. G.S. 44A-12(d) is headed No Amendment of Claim of Lien on Real Property and says a claim of lien on real property may not be amended. The only cure it offers is cancellation and substitution: the claimant, or the claimant's authorized agent or attorney, may cancel it and file a new one in its place, within the time provided for the original filing. That time is the 120 days in subsection (b), so the cure has a shelf life and the shelf life is shared with the deadline you were already racing.

Read plainly that means the safe filing day is not day 119. A sheet filed on day 90 leaves a month to notice a wrong middle initial on the record owner, cancel and refile. A sheet filed on day 119 leaves one day. Nothing in the statute rewards filing late, and subsection (b) lets you file at any time after the maturity of the obligation, so the moment the money is properly due and you know you are not getting it, there is no reason left to wait.

The clerk is also not a proofreader, but the clerk is a filter. G.S. 44A-12.1(a) says the clerk of superior court shall not index, docket or record a claim of lien on real property in such a way as to affect the title unless the document is offered for filing under a statute that provides for it and appears on its face to contain all of the information required by that statute. Subsection (b) lets the clerk accept a document for filing only, without indexing it, and then tell the person handing it over that it will not be indexed, docketed or recorded in any way that affects title. A sheet with an item left empty can come back across the counter as accepted and still be worth nothing, which is the quiet failure this form is drawn to avoid.

One more sentence in that section deserves reading before anybody files anything in anger. G.S. 44A-12.1(c) makes it a Class I felony to cause or attempt to cause a claim of lien on real property to be filed knowing the filing is not authorized by statute, or with the intent that the filing is made for an improper purpose such as to hinder, harass or otherwise wrongfully interfere with any person. This form is for money actually earned and actually unpaid.

Filing is only half of it: service is the other half

The certification printed on the form is not decoration. It reads: I hereby certify that I have served the parties listed in (2) above in accordance with the requirements of G.S. 44A-11. That is the statute telling you, on the face of the sheet, that something has to have happened before you sign it.

G.S. 44A-11(a) says a claim of lien on real property is perfected as of the time provided in G.S. 44A-10 upon the occurrence of all of the following: service of a copy of the claim of lien on the record owner of the real property, and, if the claim is being asserted pursuant to G.S. 44A-23, also upon the contractor through which subrogation is being asserted; and filing of the claim of lien under G.S. 44A-12. Two things, both required. A claim sitting on the judgment docket that was never served is not a perfected lien.

Service is easier than people expect, because the statute deliberately takes receipt out of it. G.S. 44A-11(b) says service shall not require proof of actual receipt by the listed recipient and is complete upon personal delivery of a copy, or upon deposit of a copy in a postpaid, properly addressed wrapper in a post office or official depository under the exclusive care and custody of the United States Postal Service, or in an authorized depository under the exclusive care and custody of a designated delivery service authorized under 26 U.S.C. 7502(f)(2). An owner who refuses the envelope has still been served.

The address is where people get nervous, and subsection (c) removes the guesswork. A wrapper is conclusively deemed properly addressed if it uses the address for the party listed on the permit issued for the improvement, or the address listed with the tax rolls for any county in North Carolina, or the address of the registered agent listed with the North Carolina Secretary of State's office. Conclusively deemed is strong language. Use one of those three and the address cannot be argued about later, so do not go hunting for a better one you found on an invoice.

The lien agent is a different deadline, and it is fifteen days

This is the trap that costs North Carolina subcontractors more liens than the 120 days does, because it runs from the front of the job rather than the back of it. G.S. 44A-11.1(a) makes an owner designate a lien agent for any improvement where the cost of the undertaking is thirty thousand dollars or more, either when the building permit is issued or, where no permit is required, when the contract with the owner is entered into. The exceptions are narrow: improvements to an existing single-family residential dwelling unit occupied by the owner as a residence, and the addition of an accessory building or structure incidental to that residence.

Where there is a lien agent, G.S. 44A-11.2(l) says a potential lien claimant may perfect a claim of lien on real property only if the lien agent has received a Notice to Lien Agent from that claimant no later than 15 days after the first furnishing of labor or materials by the claimant, or one of the narrow alternatives in subdivision (2) is met before the property is conveyed to a bona fide purchaser. Fifteen days from your first day, not your last.

Subsection (m) is the second bite. Even where the lien survives, a claim of lien not perfected under G.S. 44A-11 before a mortgage or deed of trust is recorded is subordinate to that previously recorded deed of trust unless the lien agent received a Notice to Lien Agent no later than 15 days after first furnishing, or received it before the deed of trust was recorded. A lien that sits behind the construction loan on a foreclosure sale is usually a lien that pays nothing.

There is a fair escape hatch and it is worth knowing. G.S. 44A-11.2(n) says a potential lien claimant is not required to comply if the lien agent contact information was neither on the posted building permit or the posted sign under subsections (d) and (e) while the claimant was furnishing at the site, nor timely provided by the owner in response to a written request under subsection (b). The same subsection protects a claimant given erroneous information about who the lien agent is. Subsection (b) gives the owner seven days to answer a written request with the lien agent's contact information, by the same delivery method you used to ask, so making that request in writing at the start of a job is cheap insurance. And subsection (j) is the sentence to remember on this page: service of the Notice to Lien Agent does not satisfy the requirements for a Claim of Lien on Real Property. They are separate documents with separate deadlines.

One hundred and twenty days to file, one hundred and eighty to sue

Filing stops the first clock and starts nothing. G.S. 44A-13(a) says no action to enforce a claim of lien on real property may be commenced later than 180 days after the last furnishing of labor or materials at the site by the person claiming the lien. Both periods run from the same day, so a claim filed on day 30 leaves five months to sue and a claim filed on day 119 leaves two.

If the property sits in more than one county, there is a second step most people miss. Subsection (c) says that for the sale under G.S. 44A-14(a) to pass all the owner's title and interest good against claims recorded or arising after the first furnishing, a notice of lis pendens must be filed in each county where the property is located except the county in which the action is commenced, and within the same time allowed for commencing the action. If neither the action nor the lis pendens is filed in time, the judgment does not direct a sale and is entitled only to the priorities the law gives an ordinary money judgment. That is the difference between a lien and a piece of paper you can frame.

Bankruptcy and receivership do not stop the calendar either, they redirect it. Subsection (a) says that where title is vested in a receiver or subject to the control of the bankruptcy court, the lien is enforced in accordance with the orders of that court, and that filing a proof of claim with the receiver or in bankruptcy together with a notice of lis pendens in each county within the time required satisfies the requirement to commence a civil action.

G.S. 44A-16 lists how a claim of lien gets discharged, and two of the entries are worth reading as a warning rather than as a remedy. Subdivision (a)(3) discharges it by failure to enforce within the time prescribed, which is the 180 days doing its work automatically. Subdivision (a)(6) lets the other side clear the docket by depositing a corporate surety bond of one and one-fourth times the amount claimed, conditioned on paying whatever is finally determined to be due. A bonded-off lien is not a lost claim, it just moves the fight from the house to the bond.

Subcontractors: whose name goes in item (2), and which dates go in (5)

A subcontractor has no contract with the owner, so G.S. 44A-8 does not reach the owner's property directly. G.S. 44A-23 is the route instead: a first tier subcontractor may, to the extent of its claim, enforce the claim of lien on real property of the contractor, in the manner provided by G.S. 44A-7 through 44A-16, perfected as of the time in G.S. 44A-10 on satisfying the requirements in G.S. 44A-11. Second and third tier subcontractors may do the same under subsection (b), subject to the notice of contract and notice of subcontract machinery in that subsection.

That is why item (2) of the form asks for two things in one item. It wants the record owner's name and address, and then, if the claim of lien is being asserted pursuant to G.S. 44A-23, the name of the contractor through which subrogation is being asserted. It is one writing space because the statute prints one, and the builder on this page keeps it as one item for the same reason. Put the owner first and the contractor you are claiming through after it.

Service follows the same logic. G.S. 44A-11(a)(1) requires service on the record owner and, where the claim is asserted under G.S. 44A-23, also upon the contractor through which subrogation is being asserted. Two envelopes, not one.

Items (5) and (5a) have a rule of their own that almost nobody knows about, and it is generous. G.S. 44A-23(d) says that when completing the claim of lien form to perfect the contractor's lien, a first, second or third tier subcontractor may use as the first or last furnishing dates either its own dates, or any date on or after the first furnishing and on or before the last furnishing by the contractor through which the claim is being asserted. A subcontractor whose own last day was months ago may still be inside the 120 days measured against the contractor's work. Read it before assuming you are too late.

One sentence in G.S. 44A-23 cuts the other way and it is the reason the waiver page on this site exists. Subsection (c) says a lien waiver signed by the contractor before the subcontractor has perfected waives the subcontractor's right to enforce the contractor's claim of lien on real property, though it does not affect the right to a claim of lien on funds or a lien under G.S. 44A-20(d). Perfecting early is what takes that away from somebody else's signature.

The lien on funds is the other half of the toolkit, and it is faster

North Carolina gives a subcontractor two different liens and this form is only one of them. G.S. 44A-18 grants a lien upon funds: a first tier subcontractor has a lien on the funds owed to the contractor it dealt with that arise out of the improvement, a second tier subcontractor on the funds owed to the first tier subcontractor, and so on down. Subsection (f) says the lien upon funds arises, attaches and is effective immediately upon the first furnishing at the site, and is perfected upon giving written notice of claim of lien upon funds to the obligor as provided in G.S. 44A-19.

It is faster because it does not wait for a clerk. Until that notice is given, G.S. 44A-18(g) lets any owner, contractor or subcontractor against whose interest the lien is claimed make, receive, use or collect payments and use the proceeds in the ordinary course of business. The day the notice lands, that stops.

G.S. 44A-20(a) puts the obligor under a duty to retain funds up to the total of the liens as to which notices have been received. Subsection (b) is the part with teeth: if the obligor pays on anyway, the lien continues on the funds in the hands of whoever received the payment, and the obligor becomes personally liable to the lien claimants up to the amount of the wrongful payments, capped at the claims noticed before payment. Subsection (d) then closes the circle: where the obligor is the owner, the claimant gets a claim of lien on real property against the owner's interest to the extent of that personal liability, filed and enforced the same way as this form.

In practice the two are used together on the same job. The notice of claim of lien upon funds reaches money that has not been paid out yet; the claim of lien on real property on this page reaches the property itself. G.S. 44A-11.2(j) says neither one is satisfied by the Notice to Lien Agent, so on a job with a lien agent there are three separate pieces of paper with three separate purposes.

What the lien covers, and when it takes effect

G.S. 44A-8 sets who has the right in the first place: any person who performs or furnishes labor, or professional design or surveying services, or furnishes materials, or furnishes rental equipment, pursuant to a contract express or implied with the owner of real property for the making of an improvement, has a right on complying with the Article to file a claim of lien to secure payment of all debts owing for that work. Design professionals and equipment rental houses are inside the statute by name, which is not true everywhere.

The date the lien takes effect is not the date you file it. G.S. 44A-10 says a claim of lien relates to and takes effect from the time of the first furnishing of labor or materials at the site by the person claiming it. That is why the first furnishing date in item (5) matters as much as the last one in item (5a): the first date sets your priority against deeds of trust and other interests, and the last date sets your deadlines. Subject, on a job with a lien agent, to the subordination rule in G.S. 44A-11.2(m).

How far the lien reaches is in G.S. 44A-9. It extends to the improvement and to the lot or tract on which the improvement is situated, to the extent of the interest of the owner. Where the lot is not separated from the owner's adjoining land by an enclosure at the time of the contract, the tract is the area reasonably necessary for the convenient use and occupation of the building, and in no case includes a building or improvement not normally used or occupied with the one the lien is claimed against.

The statute also tells you how much detail item (6) needs, in its own words, in the paragraph printed immediately after the form: a general description of the labor performed or materials furnished is sufficient, and it is not necessary for the lien claimant to file an itemized list of materials or a detailed statement of labor performed. Item (3) says something similar about the property, in the parenthetical the form itself prints: a street address, tax lot and block number, reference to a recorded instrument, or any other description is sufficient, whether or not it is specific, if it reasonably identifies what is described.

Questions people ask

Once the job is running and you are getting paid on it, the paperwork that comes next is the waiver: see the North Carolina statutory lien waiver forms, and conditional vs unconditional lien waiver for which of the two to sign.