Construction and Mechanic’s Liens: Holding Customers Accountable
If you provide a repair or renovation service or you are a supplier for the construction and repair industries, you may struggle to get clients to pay for the services or goods you’ve already provided. Fortunately, North Carolina law does protect you by allowing you to file a mechanic’s lien. To see if this is right for you, we’re sharing what these are, when they can be filed, and how we can help.
A lien is a legal claim recorded with the local county that gives an individual or organization interest in the property. When there is a lien on a property, owners are unable to borrow against their property, refinance, or sell the property. In extreme cases, the individual or organization holding the lien can foreclose on the property and sell it to get the money they are owed.
When an individual takes out a mortgage or a car loan, the lender places a lien on the property and if the buyer fails to pay back the loan, the lender can foreclose or repossess the property. This is voluntary because the buyer enters into an agreement before taking possession of the property and understands that the property is collateral for the debt.
An involuntary lien is a lien that is placed on the property by an outside organization without the agreement or consent of the property owner. Most liens are placed on the property by the IRS or a state or local tax collection agency for failing to pay income or property taxes. However, other third parties can also place a lien on the property for failure to pay a bill, debt, or fine. This includes:
- Construction companies and home repair companies
- A plaintiff who won a lawsuit against you
- Credit card company
- Government regulatory agency
- Law enforcement
Failing to pay a credit card bill or not paying a painter for painting your house can result in them placing a lien on your property and possibly foreclosing on it in the most extreme cases.
North Carolina Mechanics Lien Laws
Our business law attorneys specifically wanted to look at mechanic’s liens. These are liens filed by someone who was hired to work on a property and the property owner did not pay them in accordance with the terms of the agreement. Vendors who supply materials to these businesses can also file mechanic’s liens.
Who Can File a Mechanic’s Lien
In North Carolina, anyone who “performs or furnishes labor or professional design or surveying services or furnishes materials or furnishes rental equipment pursuant to a contract…with the owner of real property for the making of an improvement thereon” can file a mechanic’s lien on the property. In layman’s terms, this includes:
- Vendors and suppliers
- Mechanics and repair technicians
For example, let’s say a homeowner has a kitchen renovation completed. If the homeowner does not pay the contractor for the service, the contractor can place a lien on their home. However, if the contractor does not pay subcontractors or vendors for their work, they can place a lien on the contractor’s business property.
How Long Do I Have to File a Lien?
In North Carolina, you have 120 days from the last day of work on the project to file and serve a lien to the property owner.
Why You Need a Business Law Attorney to File a Lien
If you have a customer or client who owes you money on a repair, renovation, or similar service project, placing a lien on their property is a highly effective way to get them to pay what they owe. While you don’t legally need an attorney to file a lien, we highly recommend having an attorney who practices business law act on your behalf as they will understand the complexities involved. For example, your attorney will know how to fill out the paperwork, ensure it is served, and filed with the county office all in a timely manner. Attempting to do this on your own may result in an invalid lien and being unable to collect your debt.
Schedule a Consultation with a Business Law Attorney in Raleigh Today
If you would like to file a lien on the property of a non-paying customer, we can help. Our experienced business law attorneys are on your side to help you get the payment you are owed. To learn more, reach out to us today at 919-615-2473 for our Raleigh office or at 919-365-6000 to reach our Wendell office. You can also fill out the form below to get started.
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