Chapter 4: Statutory liens on real property Flashcards
Lien for unpaid work on real property
44A NC General Statutes: contractors, subs, and materialmen can claim a lien on real property if they are not paid for their work.
RP claimed under homestead exemption can be subject to mechanics lien and liens for people who work on the property, but not material liens.
One spouse can encumber T/E on her own; however, if spouse wasn’t acting as other spouses agent, a lien may not arise.
People who may be lienholders on real property
People who furnished labor, design, survey, material or equipment under a K w/ owner for property’s improvement
Timing of lien
Lien takes effect from first furnishing of labor or materials
Lien extends to improvements on the RP and owner’s interest in RP on which improvement is
Perfection of real property
File w/ the clerk of superior court in the county where the prop is located and serve a copy to the record owner of the RP.
If a sub is asserting a lien, must also serve a copy on the contractor.
Timing for claims and enforcement
Claims must be filed w/in 120 days of last furnishing of labor or materials on worksite
LH must file an action to enforce the lien w/in 180 days of the last furnishing of labor or materials
General priority rule
G/R first in time, first in rights. Relates back to the first furnishing of labor or materials at worksite
Purchase money deed of trust
Purchase money deeds of trust secure the obligation to purchase the property
PMDT have priority over all other liens, even those file earlier
If DT used to secure a loan that is used in part to purchase RP and finance improvements, the DT will have priority only to the extent that it secures the money used to purchase the property.
A prior perfected claim of lien will have priority for the amount used to finance the improvement.
Doctrine will not apply: if length of time too long between recording of deed and recording of deed of trust is too long; or if the person entitled to priority indicates an intent to forfeit the protections.
Doctrine of instantaneous seizen
Doctrine of instantaneous seizen provides: when a DT is executed, delivered, and recorded as part of same tx, the DT will related back to the instant the buyer acquires title to the prop and will constitute the highest priority.
Lien agent
Lien agents are clearinghouses for lien documentation to avoid hidden liens.
Required for improvements to RP that is 30K or more and not to owner’s single family residence or an accessory building.
If a lien agent is req. owners must designate a lien agent at start of project, give notice to agent, post contact info for lien agent on the property until construction is complete, and provide lien agent;s ctc info to issuer of any permits, and any potential lien claimant who makes a written req. w/in 7 days of the req.
Do Nudists Pack Clothes.
Contractors and Subs must w/in 3 business days share info w/ lower tier subs who do not need to visit worksite
Lien claimant’s duties
Lien claimant: must give notice to lien agent that describes the project and indicates intent to preserve their rights
Priority for lien resulting from lien agent
Priority: lien will have priority over subsequent BFPs only if:
lien agent receives notice of lien w/in 15 days of the claimant first filing labor or materials;
lien agent receives notice of the lien before the BFP records the conveyance;
or the LH perfects its claim on the prop before the BFP recorded.
Requirements for an enforceable lien
Must file w/ in 180 days of last furnishing.
File lis pendens in county where RP is located
If judgment entered, must be publicly sold by sheriff’s sale
Purchaser will take whatever title the original owner held, free and clear of all claims and interest that arose, were recorded, or were filed after the person claiming the lien first furnished the labor or materials.
Subcontractor waterfall
Subs have an action against the contractor they k with and the next tier up
This also applies to subrogation
Perfection of lien claimant
Perfection Each lien claimant must perfect by giving written notice to the obligor.
Then the obligor must retain the funds.
If obligor has already paid the amount due, the sub will not have a lien.
When an owner wrongfully pays after receiving notice of lien, the sub will be entitled to claim a lien on the RP.
Liens on realty
Subs or others who don’t deal directly w/ owner of RP can enforce lien through subrogation.
However, for 2nd, 3rd tier subs, if the owner visibly posts and files a signed notice of K, that triggers a sub duty.
The sub must serve the contractor w/ a signed notice he will not be able to enforce a subro claim on RP.
Contractor can avoid this, by providing a written notice of payment w/in 5 days.
Perfection of Sub liens: same rules, except subs must serve the contractor through which subro is asserted as well as the record owner of the property.
