This month’s installment of Dirt Tales will take a look at the new North Carolina Land Title Association Mechanics Lien Forms and when it is appropriate to use each form. The new Mechanics Lien Waiver forms were announced over a year ago. And they have been discussed ad nauseam since then. Because of this lead time all of our underwriters are adamant about our approved attorneys using the new forms and existing forms will no longer be acceptable. Since the old forms cannot be used anymore we thought it appropriate to briefly review the new forms and illustrate how easy it is to select the proper form.
The new forms offer several advantages over the old ones. They are standardized so each title company has the same forms. Plus they are copyrighted so that they are not allowed to be modified. Lastly, they contain detailed instructions and a number of well written examples that make it easy to know which form should be used. But to make it easier to understand which form is appropriate this article will look at that question.
The new Mechanics Lien Waiver Forms fall into three distinct categories: NCLTA 1, No Recent Improvements; NCLTA 2, Construction Recently Completed; or NCTLA 3, Waiver and Subordination.
Form 1 is to be used in the typical home purchase situation. A home that has been completed and lived in for some time would fit this category. This form contemplates no improvements have been made or minor improvements, such as those dictated by a home inspector, and they have been paid.
Form 2 is designed to be used for homes that have been recently built. The 120 day lien period may still be open and this form contemplates the possibility of obtaining the joinder of any subcontractors who may have furnished labor and/or materials on the job.
Form 3 is appropriate in situations where there is ongoing construction. In other words, the structure is not completed. It also contemplates the possibility of obtaining subcontractor’s signatures. This form subordinates the subcontractor’s lien rights to the deed of trust, whereas Form 2 waives the subcontractor’s lien rights.
That’s it! It is now this simple to select the appropriate form to use.