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Lien Protections for Contractors

What happens when you aren't paid for work you've already performed? If you're a contractor, subcontractor, or supplier to a building project, you have several options open to you. The main tool used by builders, suppliers, and designers is the lien on real property or lien on funds. A lien on real property is essentially a claim made by someone who has made improvements on property that they have not been paid, and therefore they have a right to a portion of the value of the property that is equal to the work that they put in to improve the property. For instance, if contractor has supplied materials and installed them on a building project, and their material and labor expenditures were $20,000, and they were unpaid for the work that they performed, they could file a lien on that property entitling them to $20,000 worth of value in that property. If subcontractors are not paid by the General Contractor, the process is similar but a lien is filed on the funds that the General Contractor receives for the work of the subcontractor.

The North Carolina legislature enacted these lien laws to help builders and suppliers get paid for their work. It is meant to give a measure of assurance to those who perform their work before getting paid that if something goes wrong with the project, or if a property owner reneges on their contractual obligations, laborers and suppliers will get paid for the value of their work improving a property. To further assure builders and suppliers, the law provides the opportunity for a lien claimant to obtain attorney fees, so that the claimant will not be out of pocket for paying their attorney in certain circumstances. If an enforcement action must be brought in court to enforce the lien, the prevailing party of that enforcement action is entitled to attorneys' fees to be paid by the non-prevailing party. Additionally, if a judge finds that the non-prevailing party made an unreasonable refusal to fully resolve a matter, the judge may award attorneys' fees to the prevailing party. 

However, with the power to file a lien comes the responsibility not to abuse that power. If any contractor gives a false statement related to what they are owed under a lien, or files a lien in bad faith for the purpose of harassing or delaying a project or person, that contractor could be found guilty of criminal charges and could have their contractor's license suspended, restricted, or revoked by the State Licensing Board for General Contractors.

If you are considering filing for a lien, need help defending against a lien claim, or are having a dispute regarding a construction project, contact Miller Law Firm today to set up an initial consultation.

For further reading, see N.C. Gen. Stat. § 44A-7 to -24.14.

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