Mechanics’ Lien Agent & NCLTA Forms Update

Report
Recent Changes to North
Carolina’s Mechanic’s Lien
Statutes and Introduction to
the On-Line Filing System for
Notices to Lien Agents
David P. Ferrell, Esq.
Vandeventer Black LLP
March 26, 2014
Your PENC Presenter
2
Overview
• Mechanics’ Lien statute – basics
• Intro to forms applicable, depending on
circumstances
• Lien Agents –
– applicability
– design professionals
• LiensNC
3
Lien Law Basics
4
N.C. Constitution
• Article X, Section 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”
5
N.C.G.S. Chapter 44A
Article 2 – Liens & Lien Agents
– Part One—Liens by Persons who Deal with Owner
– Part Two—Liens by Persons who Deal with Someone
other than Owner
Article 3 – Public Projects
– “Little Miller Act”
– Model Payment and Performance Bonds
– NO LIENS OR LIEN AGENTS
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Mechanic’s Lien Law
• Design professional, contractor, subcontractor,
or material supplier may file a claim of lien on
real property within 120 days of completion of
work
• Priority of the claim of lien relates back to the
first furnishing of labor, services or material
• Even if date is several YEARS after innocent
purchaser for value or lender acquires interest
7
Mechanic’s Lien Law
• No requirement that lien or any notice
whatsoever be of record prior to the transfer
of the property in order to have priority over
purchasers or lenders
• Lien takes priority over the lender’s deed of
trust and the innocent purchaser’s interest in
the property
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Mechanic’s Lien Law
• Work may not be “visible”
– Design documents
• Work or materials may be incorporated into
complex construction
• Almost anything can constitute “work” or
“materials”
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Result: Hidden Mechanic’s Liens
• Lien has priority
• Has resulted in prolonged litigation against
hundreds of purchasers, lenders and their title
insurance companies
• Millions of dollars lost/paid in claims
10
“Hidden Lien”
• “Claim” relates back to first furnishing
• “Claim of lien” does not have to be filed until
120 days after last furnishing
Buyers, Lenders and even lien
claimants could not be
protected when the money was
on the table!
11
Owner
A person who
• has an interest in the real property improved and
• for whom an improvement is made and
• who ordered the improvement to be made.
• includes successors in interest of the owner and agents
of the owner acting within their authority.
G.S. 44A-7(6)
Includes “contract purchaser” who is planning
construction – purchase/construction loan
Dalton Moran Shook vs. Pitt Dev. Co. (1992)
12
“Contractor”
• Contractor – A person who contracts with an owner
to improve real property
§44A-7(3)
Has nothing to do with whether they are a
“general contractor” or licensed under Ch. 87!!
NOT THE OWNER!
13
“Design Professionals” –
classic “first furnishers”,
starting the project
• Architects, engineers, surveyors
– Owner must provide name and contact info of
MLA to design professional within 15 days of
appointment of lien agent
– May designate lien agent in contract with design
professional
14
Mechanics’ Lien Agent Law
Effective April 1, 2013
Projects:
• First contracted after April 1, 2013
• Over $30,000
• Residential or commercial
• NOT renovation to property used by Owner
as a residence (no matter price)
• Whether or not a building permit is needed
15
Mechanics’ Lien Agent Law
Owner must:
• appoint lien agent
• post at job site
• Provide info to contractors & subs
Lien Agent must be a title insurance underwriter
or agent registered with NC Dept. of Insurance
16
Preserving priority of potential
lien claimant’s lien rights:
Notice to Lien Agent must be filed with MLA
before:
• deed or deed of trust recording (or)
• within 15 days of first furnishing labor or
materials at the site
By filing traditional Claim of Lien on Real
Property prior to deed or deed of trust
recording
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Form of Notice to Lien Agent
– Statutory Form
NOTICE TO LIEN AGENT
1.
2.
3.
4.
Potential lien claimant's name, mailing address, telephone number, fax number (if available),
and electronic mailing address (if available):
Name of the party with whom the potential lien claimant has contracted to improve the
real property described below:
A description of the real property sufficient to identify the real property, such as the name
of the project, if applicable, the physical address as shown on the building permit or notice
received from the owner:
I give notice of my right subsequently to pursue a claim of lien for improvements to the
real property described in this notice.
Dated:___________________
_________________________
Potential Lien Claimant
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Lien Agent must be a title insurance underwriter
or agent registered with NC Dept. of Insurance
ALL registered lien agents operate
exclusively through LiensNC.com !
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North Carolina Land
Title Association
Forms
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Mechanics’ Liens
Pre-April 1 Start
OR No Lien Agent
• Construction Loan
– Form 3 –
• Owner
• ALL contractors
Post-April 1 Start
& Lien Agent Appointed
• Form 5 – Owner
• Construction Loan
– Form 7 (or 6)
• Notice filers
• First furnishers in last 15 days
• Completed Construction
• Completed Construction
– Form 2 –
• Owner
• ALL contractors
– Form 6
• Notice filers
• First furnishers in last 15 days
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NCLTA Lien
Forms
NCLTA has
adopted lien
forms to address
the MLA bill,
approved March
19, 2013, being
revised currently.
22
NCLTA
Lien Forms
NCLTA has
adopted lien
forms to address
the MLA bill,
approved March
19, 2013 being
revised currently.
23
Coming soon …
Revised NCLTA forms
On-line at www.nclta.org
24
LiensNC –
Search & Report
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LiensNC.com
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Preparing for Closing
Goal: locate hidden liens before closing
Check public record
Review Offer to Purchase and Contract
Check LiensNC.com website
Enter “Closing Notice” on the Appointment for this
property to receive:
– Related Filings Report
REAL
– Notice of any future filings
TIME !
• Consider 15-day window
•
•
•
•
•
– Landscaping, cleaning, commissioning, seal coating, line painting,
other painting
– ‘Finish’ contractors
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Registered
Address for
ALL Lien
Agents:
LiensNC
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On-line
assistance &
information
29
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Three Things to Remember
1. LiensNC.com—Entry number
2. This is not the Register of Deeds
3. Closing attorney should check within 24
hours prior to recording/closing
31
Login to
the app:
1
2
3
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Search Period
FROM: “FIRST CONTRACTING”
• Before the survey
• Before the plat (for developer)
• Before the architectural drawings (for new condo)
• Before the purchase (for acquisition/construction loan)
THROUGH: “LAST 15 DAYS PRIOR TO CLOSING” (so
search to date of closing & Form 5, 6 & 7 include latest
providers)
• PLC’s can file 15 days after first furnishing, -- which may be
post-closing if first furnishing is just before closing
Remember: Work often “starts” before they own the
property. See Pitt Dev. V. Dalton Moran Shook
33
Entry Number
• Best method to properly ID your subject
property and project
• Entry Number appears on building permit,
NCBA Offer to Purchase (newest version),
other contract documents
• May be more than one Entry Number for
project (Subdivision, Phase and Lot)
34
Entry Number search
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No Entry Number? What
next?
• This is NOT the Register of Deeds
• Database is based on property, not owner
name
• Search any one of:
– Appointment of Lien Agent
– Potential Lien Claimant
– Property Address
– Other Legal Description
36
Search Tips
• No wild card
• Start simple and literal
• DO USE
– Distinctive words (Owner, street name)
– Connectors (ALL CAPS)  AND, OR, NOT
– Quotation marks “ “ around multiple words that have to appear
together precisely
• DO NOT USE
– Common words (North or Smith)
– Abbreviated words or initials
• Avoid: “St” or “Rd” or “Dr”)
• Avoid: “D.R.” or “DR” or “D R ”
– Plurals: Builder vs. Builders
– Remember: Work often “starts” before they own the property. See
Pitt Dev.V. Dalton Moran Shook
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Advanced Search Options
38
Search Example
39
Search Example
40
Search Example
41
Search Example
42
Search Example
43
Search Example
44
Related
Filings
Report
ALL INFORMATION
On-screen
Download
or
Choose “Closing
Notice” and it will be
automatically emailed
to you as well as
notice of any future
filings on this Entry
Print or Download
Number
NO
“DOCUMENTS”
TO REVIEW!!
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Analyze Results
Owner
Contractor
Design Professionals
Potential Lien Claimants
Pre-permit Workers (earlier filings)
46
Commenting Option
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False Lien Waivers
• Still a Class 1 Misdemeanor
• Now jeopardizes contractor’s license
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Future Changes
Under Consideration
49
LLC Administrative Utility
50
Administrative Utility –
Site Statistics
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Administrative Utility –
Improved Communications
Login Page Welcome Message
Email Notifications
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User Data Collection –
Account Signup
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User Data Collection –
User / Group Profiles
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User Data Collection –
Company Group Profiles &
Permissions for Account Signup
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Other Future Updates
in the Works
• Additional Online Possibilities
 Waivers/Revocations
• User Data Collection
 Prepopulating Data
 eWallet
• Static Website Improvements
 Social Media
 Mobile App
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Questions?
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David P. Ferrell, Esq
Vandeventer Black LLP
434 Fayetteville Street
Suite 2000
P.O. Box 2599
Raleigh, NC 27602-2599
(919) 754-1171
(919) 754-1317 (fax)
[email protected]
www.vanblk.com
58

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