The Statewide Title Newsletter and Legal Memorandum

The Statewide Title Newsletter and Legal Memorandum Printable Article - Statewide Title, Inc.

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Issue  172  Article  298
Published:  11/1/2009

Dirt Tales From the Deed Vault - Episode 31
John Dillard, Vice President and Legal Counsel

Julius Crane was ready to move into the new house he and his wife, Katrina had just finished building in Sleepy Hollow Estates. The moving company, Van Tassel Movers, delivered their furnishings and the Cranes had just finished arranging everything and were about to settle in and begin enjoying their new home when they heard a knock on their door. A sheriff's deputy delivered a set of papers to the Cranes without explaining what they were. Julius decided he would take them to his attorney the following morning.

The law firm of Washington and Irving had handled the closing for Julius and his wife when they bought their lot the previous year. Attorney Charles Ichabod looked the papers over and declared that one of the subcontractors that had worked on the construction of the Crane's home had not been paid and was filing a claim of lien. He then pulled their file and extracted a lien waiver form that was signed by the general contractor and a number of other subcontractors who had worked on the construction. The subcontractor who was filing the claim of lien had not signed the form.

Attorney Ichabod explained that under North Carolina law a contractor performing work had 120 days from the last time they furnished labor or materials to file their lien and that although efforts had been made to identify and obtain the signatures of all the contractors who had worked on the Crane's home often someone was missed. There was some good news, he explained. Since the main contractor had not been the owner of the lot then his signature on the lien waiver, which was obtained before the subcontractor filed their lien, would prevent that subcontractor's lien from attaching to the Crane's property.

North Carolina has now standardized lien waiver forms, Form 1, Form 2 and Form 3. Form 1 is used in normal buy and sell transactions were no major improvements to the dwelling have been made. Form 2 is to be used for recently completed construction and Form 3 is used with ongoing construction. The forms are copyrighted and may not be amended without the approval of the title company. Where it is necessary to obtain the signatures of subcontractors the attorney must rely on another source for the names of those contractors and often one or more may be overlooked. As we saw in the situation with the Cranes, in general as long as the contractor and owner are separate, the contractor's execution of a waiver of lien rights will limit the subcontractor's claim to a claim on funds owed the general contractor.

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