North Carolina Legislative and Oregon Regulatory Update

North Carolina Legislative and Oregon Regulatory Update

The North Carolina legislature recently amended its mechanic liens laws effective April 1, 2013.  The Oregon Attorney General adopted final rules.

NORTH CAROLINA SENATE BILL 42

 

 

The amendments to the mechanic liens laws are applicable to any improvements to non-owner occupied real property for which the cost at the time that the original building permit is issued is $30,000 or more (the “improvements”).

 

 

A “lien agent” is a title insurance company or title insurance agency designated by the owner.

 

 

An “inspection department” means any city or county building inspection department.

 

 

A “potential lien claimant” is any person entitled to claim a lien for the improvements.

 

 

With regard to the improvements, the owner must designate a lien agent by the time the owner first contracts with any person to improve the real property.  The owner need not designate a lien agent for improvements to an existing single family residential dwelling unit that is used by the owner as a residence.

 

 

The owner must deliver written notice of designation to its designated lien agent by any method allowed below and must include in its notice the street address, tax map lot and block number, reference to recorded instrument, or any other description that reasonably identifies the real property for the improvements to which the lien agent has been designated.  Designation of a lien agent does not make the lien agent an agent of the owner for purposes of receiving a Notice of Claim of Lien upon Funds or for any purpose other than the receipt of notices to the lien agent.

 

 

The lien agent must be chosen from the list of registered lien agents maintained by the North Carolina Department of Insurance.

 

 

In the event that the lien agent revokes its consent, is removed by the owner, or becomes unable or unwilling to serve as lien agent before the completion of all improvements to the real property, the owner must within 3 business days of notice of such event do all of the following:

  • Designate a successor lien agent and provide written notice of designation to the successor lien agent;
  • Provide the contact information for the successor lien agent to the inspection department that issued any required building permit and to any persons who requested information from the owner relating to the predecessor lien agent;
  • Display the contact information for the successor lien agent on the building permit or attachment posted on the improved property or, if a building permit was not required, on a sign disclosing the contact information for the lien agent that is conspicuously and continuously posted on the property until the completion of all construction if the contact information for the lien agent is not contained in a building permit or attachment posted on the property.

 

Until the owner has fully complied with the above provisions, notice given to the predecessor lien agent is effective notice, regardless of whether the lien agent becomes unable or unwilling to serve.

 

 

Any attorney who, in connection with a transaction involving improved real property for which the attorney is serving as the closing attorney, contacts the lien agent and requests copies of the notices received by the lien agent relating to the real property not more than 5 business days before the date of recordation of a deed or deed of trust on the real property, will be considered to have fulfilled the attorney’s professional duty as closing attorney to check the notices to lien agent and will have no further duty to request that the lien agent provide information relating to notices received later by the lien agent.

 

 

“Contact information” means the name, physical and mailing address, telephone number, fax number, and e-mail address of the lien agent designated by the owner.

 

 

Within 7 days of receiving a written request by a potential lien claimant by any delivery method allowed below, the owner must provide a notice to the potential lien claimant including the contact information for the lien agent, by the same delivery method used by the potential lien claimant in making the request.  A potential lien claimant making a request who has not provided labor at the site of the improvements, or who did so before the posting of the contact information for the lien agent is not required to notify the lien agent until the potential lien claimant has received the contact information from the owner.

 

 

A contractor or subcontractor for the improvements must, within 3 business days of contracting with a lower-tier subcontractor who is not required to provide labor at the site of the improvements, provide the lower-tier subcontractor with a written notice including the contact information for the lien agent designated by the owner.  This notice must be given according to the requirements below or may be given by including the lien agent contact information in a written subcontract entered into by, or a written purchase order issued to, the lower-tier subcontractor entitled to the notice.

 

 

Any contractor or subcontractor who has previously received notice of the lien agent contact information, whether from the building permit, the inspections office, a notice from the owner, contractor, or subcontractor, or by any other means, and who fails to provide the lien agent contact information to the lower-tier subcontractor within 3 business days, will be liable to the lower-tier subcontractor for any actual damages incurred by the lower-tier subcontractor from failing to give notice.

 

 

For the improvements, any building permit issued must be conspicuously and continuously posted on the property for which the permit is issued until the completion of all construction.

 

 

For the improvements, a sign disclosing the contact information for the lien agent must be conspicuously and continuously posted on the property until the construction’s completion if the contact information for the lien agent is not contained in a building permit or posted on the property.

 

 

The notice must be addressed to the person required to be provided with the notice and must be delivered by one of the following methods:

  • Certified mail, return receipt requested;
  • Signature confirmation as provided by the United States Postal Service;
  • Physical delivery and obtaining a delivery receipt from the lien agent.  A “delivery receipt” includes an electronic or fax confirmation;
  • Fax with a fax confirmation;
  • Depositing with a “designated delivery service” as defined by the Internal Revenue Code; or
  • Electronic mail, with delivery receipt.

 

A return receipt or other receipt showing delivery of the notice to the addressee or written evidence that the notice was delivered by the postal service or other carrier to but not accepted by the addressee is prima facie evidence of receipt.

 

 

When a lien agent is identified in a contract for improvements to real property consisting of a single-family residence entered into between an owner and a contractor for the improvements to the property, the contractor will be considered to have met the requirement of notice for the claim of lien on real property of a potential lien claimant on the date of the lien agent’s receipt of the owner’s notice of designation.  The owner must provide written notice to the lien agent including the information about the contractor required in a Notice to Lien Agent, by any method of delivery allowed above.  The lien agent must include the contractor in its response to any persons requesting information relating to persons who have given notice to the lien agent.

 

 

When a lien agent is not identified in a contract for the improvements entered into between an owner and a design professional, the design professional will be considered to have met the requirement of notice on the date of the lien agent’s receipt of the owner’s designation of the lien agent.  The owner must provide written notice to the lien agent containing the information pertaining to the design professional required in a Notice to Lien Agent by any method of delivery allowed above.  The lien agent must include the design professional in its response to any persons requesting information relating to persons who have given notice to the lien agent.  A “design professional” is any registered architect, engineer, land surveyor, or landscape architect.

 

 

The form of the Notice to Lien Agent must be substantially as follows:

 

 

“NOTICE TO LIEN AGENT

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”

 

 

The service of the Notice to Lien Agent does not meet the service or filing requirements applicable to a Notice of Claim of Lien upon Funds.

 

 

The Notice to Lien Agent need not be filed with the clerk of superior court.  An error in the description of the improved real property provided in the notice will not prevent a person from claiming a lien or otherwise perfecting or enforcing a claim of lien if the improved real property can otherwise reasonably be identified from the information contained in the notice.

 

 

A potential lien claimant may perfect a claim of lien on real property only if:

  • The lien agent has received notice from the potential lien claimant no later than 15 days after the first distribution of labor or materials by the potential lien claimant and any one of the following conditions is met:
    • The lien agent has received notice from the potential lien claimant before the date of recordation of a conveyance of the property interest in the real property to a bona fide purchaser for value protected under North Carolina law who is not an affiliate or relative of the owner; or
    • The potential lien claimant has filed a claim of lien before the recordation of a conveyance of the property interest in the real property to a bona fide purchaser for value protected under North Carolina law who is not an affiliate or relative of the owner.

 

The claim of lien on real property of a potential lien claimant that is not filed before the recordation of any mortgage or deed of trust will be subordinate to a previously recorded mortgage or deed of trust unless:

  • The lien agent has received notice from the potential lien claimant within 15 days after the first distribution of labor or materials by the potential lien claimant; or
  • The lien agent has received notice from the potential lien claimant before the date of recordation of the mortgage or deed of trust for the benefit of one who is not an affiliate or relative of the owner.

 

With regard to the improvements, a potential lien claimant will not be required to comply with the above provisions if the lien agent contact information is neither included in the building permit, an attachment to the permit, or a sign posted on the improved property at the time the potential lien claimant was providing labor at the site of the improvements, nor timely provided by the owner in response to a written request for information regarding potential lien claimants.  The lien rights of a potential lien claimant who is given false information by the owner regarding the identity of the lien agent will not be extinguished or subordinated.

 

 

A potential lien claimant may provide the Notice to Lien Agent regardless of whether the improvements for which the potential lien claimant is responsible are contracted, started, in process, or completed at the time of submitting the notice.

OREGON RULES

 

Our August 7, 2012 Compliance Memorandum discussed temporary rules promulgated by the Oregon Attorney General pursuant to its authority under Senate Bill 1552, which was discussed in our April 19, 2012 Compliance Memorandum, to implement the Oregon Foreclosure Avoidance Mediation Program.  On January 7, 2013 the Attorney General adopted the temporary rules as final rules.