View as Web Page Subscribe Send to a Friend
Marshall, Roth & Gregory, P.C.

A Legal Moment
Article Title


90 Southside Avenue,
Ste 100
Asheville, NC 28801
90 Southside Avenue Suite 100
90 Southside Avenue Suite 100
Lien Agents: the End of "Hidden Liens"?
    In July 2013, the N.C. Association of Realtors and the N.C. Bar Association released a new version of Standard Form 2-T Offer to Purchase and Contract in which an ostensibly minor change to Paragraph 8(e) requires sellers, in certain circumstances, both to designate a lien agent, and deliver a copy of the designation to the buyer.
  This revision resulted from a significant re-writing of North Carolina’s lien laws that became fully effective on April 1, 2013.
    In this edition of A Legal Moment, I cover some of the basic rules of the new lien law that might affect a standard residential closing and provide some tips on how you, as brokers, might assist your clients with lien issues.
    Some background is necessary. Under prior law, a contractor, supplier of materials, or design professional could file a lien for unpaid bills within 120 days of completing work on a property. For priority purposes, the filing of such a lien related back in time to the date the contractor first worked on the property with the result that a contractor might have a lien superior to a lender advancing funds at a closing without the lender being aware of it. There was no requirement for the contractor to file anything in the public records showing potential liens. This situation, known as the problem of "hidden liens," was addressed by legislation passed in 2012.
    Now, under the new law, an owner making improvements to real property (new or remodel) costing $30,000 or more is required to appoint a lien agent before a building permit is issued.
     Notably, it is not necessary to appoint a lien agent when an owner is undertaking improvements to the owner’s own primary single-family residence, or for projects costing under $30,000.
    When appointment of a lien agent is required, however, an owner must designate in writing a lien agent (who him- or herself is registered with the Department of Insurance), and deliver the written designation to the lien agent.
    Once the lien agent has been appointed, an owner is required to provide all contractors, suppliers, and design professionals working on the project the lien agent’s contact information.  Those individuals, in turn, can elect to file a Notice to Lien Agent of their involvement in the project, and, by doing so, they preserve their right to file a lien which relates back to the initial date they started working on the project – just as under the old law.
   Any contractor, supplier, or design professional working on improvements who does not file a Notice with the lien agent of his or her involvement in the project loses the right to file a lien after the property is sold.
    In practice, appointing a lien agent, and giving contractor notice to that agent, is accomplished through a web portal:  “LiensNC,” ( All subsequent communi-cations among owners, lien agents, and contractors can occur through this web portal.
    Importantly, all such filings are searchable prior to closings; this should therefore preclude the problem of “hidden liens.”
    An additional rule requires an owner to give notice to the lien agent on behalf of custom builders or design professionals.
    Here is what I think is most crucial for you as brokers. First, if there have been any improvements to the property (new or remodel) exceeding $30,000 near the closing, you need to determine whether appointment of a lien agent was necessary and, if so, actually appointed. The need for such appointments will most likely arise in new construction or improvements under the supervision of an architect.
   Second, if working with sellers, get this information during the listing interview. If working with buyers, get this information when you are making your offer.
   Third, be prepared to assist in getting signatures on lien affidavits to release any potential lien claims before closing.
    Finally, be sure to share anything you learn about the construction and lien agent history of the property with the attorneys involved in the closing.
♢ ♢ ♢
     Please do not hesitate to contact me ( to receive more information on this topic or to suggest topics for future editions of 'A Legal Moment'.
   You may not rely on this content as legal advice for any specific situation, but should instead contact an attorney for specific advice.

Marshall, Roth & Gregory, P.C. • 90 Southside Avenue Suite 100 • Asheville, NC 28801
Subscribe | Unsubscribe | Send to a Friend | Preferences | Report Spam
Powered by MyNewsletterBuilder
Facebook Connect
Twitter Button