Bill Summaries: H 489 MECHANICS LIEN AND BOND LAW CHANGES.

Tracking:
  • Summary date: May 25 2011 - More information

    House committee substitute makes the following changes to 1st edition. Deletes all provisions of the previous edition. Provides that the Legislative Research Commission (Commission) may study North Carolina’s mechanics’ lien and bond laws and may make recommendations on ways to modernize and improve those laws. Details items the Commission may study and reporting requirements. Changes title to AN ACT AUTHORIZING THE LEGISLATIVE RESEARCH COMMISSION TO STUDY NORTH CAROLINA’S MECHANICS’ LIEN AND BOND LAWS.


  • Summary date: Mar 28 2011 - More information

    Makes an organizational change, deleting GS 44A-17 and moving the definitions contained therein, contractor, first tier subcontractor, obligor, second tier subcontractor, and third tier subcontractor to GS 44A-7.
    Enacts new GS 44A-9.1 regarding the Notice of Commencement required to be filed with the clerk of superior court in each county in which any part of the real property is located prior to commencing improvement to any real property or recommencing completion of any improvement after default or abandonment of the real property. Provides criteria under which a Notice of Commencement (Notice) is required; directs the clerk of court to index the Notice as specified; provides guidelines for the posting and distribution of the Notice; and provides specifications as to the content of the Notice and a sample form for the Notice. Provides that the filing of the Notice does not create a lien. Provides the consequences of failing to file the Notice and the process for amending the Notice.
    Enacts new GS 44A-9.2 directing the authority issuing a permit required to be posted for a particular improvement project to include in no less than 14-point, capitalized, boldfaced type a warning that a Notice must be filed and posted on the job site before the first inspection. Also requires the permit issuing agency to provide the applicant with two or more copies of a Notice of Commencement form that conforms with the requirements of proposed GS 44A-9.1.Provides that the receipt of the Notice is a prerequisite for inspections. Does not require filing a Notice before the issuance of a permit. Provides that there is no liability in any civil action for a permit issuing authority for the failure to verify that a Notice has been filed as required under this section. Provides exceptions for the issuance of a permit or conducting of an inspection without providing the issuing authority with a copy of the Notice.
    Enacts new GS 44A-9.3 regarding the Notice of Owner Built Project required to be filed with the clerk of superior court for each county in which any part of the real property is located prior to commencing improvement to any real property or recommencing completion of any improvement after default or abandonment of real property for owner- built projects. Provisions apply to an owner acting as a general contractor on a project which involves the construction of a residence designed to be occupied by one to four families. Provides criteria under which a Notice of Owner Built Project (Notice of Owner) is required; directs the clerk of court to index the Notice of Owner as specified; provides guidelines for the posting and distribution of the Notice of Owner; and provides specifications as to the content of the Notice of Owner and a sample form for the Notice of Owner. Provides that the filing of the Notice does not create a lien. Provides that the Notice of Owner is effective upon filing with the clerk of superior court. Requires the Owner to sign the Notice of Owner and does not permit someone else to sign in the owner’s place. Provides the consequences of the Owner’s failure to file the Notice of Owner and the process for amending the Notice of Owner.
    Amends GS 44A-10 to provide the effective date of a lien claim on real property is the earlier of the following: (1) the time that the claimant files its claim of lien on real property with the clerk of superior clerk; (2) the time that a Notice of Commencement is filed with the clerk of superior court; or (3) for a first, second, or third tier subcontractor, that date of filing its notice to the owner if there has been no Notice of Commencement previously filed for the contractor through which the subcontractor has provided labor and materials for the improvement of the property. Provides criteria governing satisfying lien claims when there are insufficient proceeds to satisfy all claims of lien on real property. Provides that if a Notice of Commencement or Notice to Owner is filed no more than five days before the date that a deed or a deed of trust is recorded for the same real property, the claims of lien relating back to the date and time of the filing of the notice of commencement are presumed inferior to the rights created by the deed or deed of trust unless a contrary intention is expressed with the terms of the deed or deed of trust.
    Amends GS 44A-12 to modify the form for filing a claim of lien on real property. Adds provisions to the form for a partial lien waiver and a final lien waiver.
    Enacts new GS 44A-17.1 to provide that before a subcontractor may assert a claim of lien on real property the subcontractor must serve a written notice to the owner and file with the appropriate clerk(s) of superior court a written notice containing information as specified in proposed GS 44A-17.1. Requires that service be completed according to the provisions of GS 44A-19(d) [Permits service by personal delivery or any manner authorized under Rule 4 of the NC Rules of Civil Procedure].
    Amends GS 44A-18 to clarify that first tier, second tier, or third tier subcontractors may perfect their claims by service of the notice of claim of lien upon funds to the extent of the claim. Clarifies that a lien on funds granted under this statute arises, attaches, and is effective immediately upon the furnishing of labor, materials, or rental equipment at the improvement site by a subcontractor. Provides additional guidelines regarding subrogation rights of a first, second, or third tier subcontractor. Makes conforming changes.
    Amends GS 44A-19, notice of claim of lien upon funds, to make conforming changes and technical corrections.
    Amends GS 44A-20 regarding the duties and liability of the obligor (the owner, contractor, or subcontractor in any tier who owes money to another for the partial or total performance of a contract to improve real property). Makes clarifying changes regarding payments by the obligor to a contractor or subcontractor against whose interest the lien or lien funds are claimed after receipt of the notice of claim of lien upon funds to the obligor. Provides that the obligor does not incur personal liability to the person or persons entitled to a lien upon funds for paying out funds in violation of subsection (b) of GS 44A-20. Provides guidelines regarding the obligor’s right to reimbursement, indemnification, setoff, and recoupment that arises out of subsection (b).
    Amends GS 44A-23 regarding the perfection of the subrogation rights of a subcontractor. Provides that when completing the claim of lien on real property the date on which labor or materials were last furnished on the real property can be either the date when the first tier subcontractor making the claim last furnished labor or materials or the date when the contractor through which the claim of lien is being asserted last furnished labor or materials on the real property. Provides that a lien waiver signed by the contractor before the commencement of the action waives the subcontractor’s right to a claim of lien on real property but does not affect the subcontractor’s rights to a claim of line on funds under Article 2 of GS Chapter 44A. Provides that first tier, second tier, and third tier subcontractors are to give notice to owner (was, notice of claim of lien upon funds) to enforce the claim of lien on real property of the contractor created by Part I of Article 2 of GS Chapter 44A. Provides exceptions when the second or third subcontractor cannot enforce the claim of lien on real property of the contractor. Deletes the form for the notice of contract under this section. Makes conforming changes.
    Amends GS 44A-24 to make a false statement by a contractor or any other person receiving payment from an obligor regarding improvements to real property or the conveyance of real property with improvements as to the amounts due or claimed to be due a Class 1 misdemeanor and subject to a claim for violation under GS 75-1.1. Provides additional specifications as to the elements of the offense. Also makes it a Class 1 misdemeanor to knowingly sign or direct another to sign a false statement.
    Amends GS 44A-27 to provide for the action on payment bonds and service of notice. Requires a contractor to provide a copy of a payment Bond as required under Article 2 within seven calendar days of receiving a written request served by a claimant under the provisions of GS 44A-27(d). Subsection (d) provides the form of the notice of subcontract to be used by the claimant. Also places limitations on the claim.
    Effective July 1, 2012, and applies to improvements to real property for which the first permit required is obtained on or after that date, or, with respect to projects for which no permit is required, applies to improvements to real property commenced on or after that date.


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