NORTH CAROLINA—S42—New Law Effective 4/1/13

Reminder – This statute goes into effect 4/1/13. Our original post from 7/30/12 is listed below:

Passed simultaneously with H1052, S42 goes into effect for any projects where the first furnishing of labor or materials is on or after April 1, 2013. The new legislation provides for a lien agent to be designated on private projects to prevent "hidden liens". If no notice is served upon the lien agent prior to the property being sold, or the recording of a deed of trust, lien rights may be lost or the lien may be subordinate to the deed of trust. Highlights of the requirements include:

* A lien agent is defined as a title insurance company or agency, designated by an owner.
* A lien agent must be designated no later than when the owner signs a contract for any improvement exceeding $30,000.00 at the time the building permit is issued.
* The lien agent shall be chosen from a list of agents maintained by the Department of Insurance.
* An attorney handling a transaction regarding the improved real property must request copies of notices received by the lien agent not more than 5 business days prior to the recordation of a deed or deed of trust on the real property.
* The owner must provide the lien agent information within 7 days of a lien claimant's request.
* A contractor or subcontractor must provide written notice of the lien agent information to any lower-tier subcontractor who is not providing labor at the job site within 3 days of their written contract with the lower-tier subcontractor, or the information may be included within the contract.
* Notice to lien agent must be served within 15 days from first furnishing materials or services unless the notice is served, or the lien is filed, prior to the conveyance of the property.
* Designated lien agent information is to be provided for the building permit.
* If the lien agent information is not contained in the building permit, is not posted on the project at the time a lien claimant provided labor to the project, or is not provided by the owner upon written request, the notice to lien agent is not required.
* The lien agent must receive notices and notices of claim of lien upon funds and maintain a record of the date and time of delivery and the information contained in each notice, and must acknowledge receipt of such notice to the lien claimant within 3 days from receipt. A lien agent who receives notice on a project for which they are not the designated lien agent must notify the lien claimant within 3 days that they are not the designated lien agent.
* Once the lien claimant has served the notice to lien agent, and a notice of claim of lien upon funds, with a copy to the lien agent, no action of the contractor shall prejudice the rights of a subcontractor without his written consent.
*The lien agent requirements do not apply to residential owner-occupied improvements.
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