North Carolina’s Mechanics’ Lien and Bond Laws – Part 6
This article by Attorney Lee Peindl is one of a continuing series of articles that focuses on legislation affecting North Carolina’s Mechanics’ Lien and Bond Laws. It is adapted from Attorney Lee Peindl’s seminar on Lien Law changes.
Changes to the Notice of Contract Provisions
Effective January 1, 2013
(N.C. Gen. Stat. §44A-23)
Notice of Contract Changes
The current version of N.C. Gen. Stat. § 44A-23 contemplates only the contractor posting and filing the Notice of Contract. Effective January 1, 2013, the statute will allow the owner to post and file the Notice of Contract. Additionally, the deadlines associated with the Notice of Contract will be relaxed. The owner or contractor will be able to comply with the Notice of Contract requirements by posting and filing the Notice of Contract within the latter of (1) 30 days following the date the permit is issued for the improvement of the real property or (2) 30 days following the date the contractor is awarded the contract for the improvement of the real property involved. The statute does not define “permit.”
Bankruptcy Provisions—Effective January 1, 2013
(N.C. Gen. Stat. §44A-18)
Recent bankruptcy cases generated confusion regarding the date that a lien upon funds arises or attaches, and therefore whether a Notice of Claim of Lien Upon Funds could be served after a party in the contractual chain files bankruptcy.
Effective January 1, 2013, section §44A-18 will make clear that a lien upon funds arises, attaches, and is effective immediately upon the first furnishing of labor, materials, or rental equipment at the site of the improvement. This clarification is intended to permit subcontractors and suppliers to serve Notices of Claim of Lien Upon Funds (and related subrogated Claims of Lien on Real Property) after another party in the contractual chain files bankruptcy.
The revisions also make clear that until a lien claimant serves a Notice of Claim of Lien Upon Funds, any owner, contractor, or subcontractor against whose interest the lien upon funds is claimed may make, receive, use, or collect payments thereon and may use such proceeds in the ordinary course of its business.
We will examine this topic in further detail in upcoming blog posts.
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