NORTH CAROLINA CONSTRUCTION LIEN LAW This resea

NORTH CAROLINA CONSTRUCTION LIEN LAW

This research paper outlines and discusses the legislative purpose and history, basic framework, and issues associated with the implementation of North Carolina's construction or mechanics' lien law, N.C. GEN. STAT. secs. 44A-7 et seq. (2002).

All 50 states, including North Carolina, have enacted construction or mechanics' lien laws. According to Black's Law Dictionary, a mechanics' lien is "a claim created by state statute for the purpose of securing priority of payment of the price or value of work performed and materials furnished in erecting, improving and repairing a building or other structures" (981). Elias says the intended use is "to collect debts owed for work and materials contributed to construction and real estate improvement" (1/2). Mechanics' liens are uniquely an American creation. Great Britain, for example, has never recognized them. Urba et al. said that "mechanics' liens were recognized neither at common law nor in equity" (286).

After the Civil War, mechanics' liens were made a requirement under the North Carolina Constitution, which provided under current article x, sec. 3: "The General Assembly shall provide by proper legislation for giving to mechanics and laborers an adequate lien on the subject-matter of their labor."The General Assembly adopted the first such law in 1869. In 1971 "the legislature completely rewrote subcontractors' lien laws in order to clarify ambiguities

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security interest in that fixture under sec. 25-11-10. It can also obtain a mechanics' lien in ordinary building materials but cannot obtain a U.C.C. security interest. According to Urba et al. "the North Carolina case law . . . is not very enlightening on the issue of whether a vendor of materials which become fixtures may obtain a mechanics' lien" (291). They express the opinion that "it would seem that the North Carolina courts could properly hold that the vendor of fixtures may perfect and enforce a mechanics' lien" (291). State Mechanics' Liens v. Federal Statutory Liens. According to Urba et al., "contractors have priority from the first date of furnishing labor and materials [under the relation back doctrine discussed below]," but mortgage liens of federal agencies have priority over subsequently filed contractors' liens --i.e. the state mechanics' lien only takes priority if it has been reduced first to a final judgment (343-344). The Federal Tax Lien Act of 1966 "expanded the class of interests to which priority over unfiled tax liens was granted to include mechanics' liens" (Urba et al. 331). A mechanics' lien, however, has priority over a federal tax lien only if the work was done before notice of federal tax lien

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