Will QR Code Technology Provide Contractors Quick Relief in Filing Preliminary Lien Notices?

Ever since its passage last summer, North Carolina’s so-called “lien agent statute” has caused much consternation throughout the commercial construction industry, with many contractors, subs and suppliers worried that it will be inconvenient and expensive for them to comply with the statute’s various requirements (which I’ll be discussing in detail as my “Lien & Bond Law Revolution” series continues in the weeks ahead).  The title insurance industry, however, has tried to assure leery potential lien claimants that an online application will make filing preliminary lien notices convenient and inexpensive.This week, we’ll get down to where the rubber meets the road on that assurance. 

On Thursday, February 21, at 10:00 a.m., attorney David Ferrell of Vandeventer Black, legal counsel for the NC Land Title Association, will show a video demonstration/overview of the proposed online system.  The demonstration will take place in Room 424 of the Legislative Office Building in downtown Raleigh.  Mr. Ferrell will then demonstrate the system for construction lawyers during lunch at Thursday’s day-long CLE program at the North Carolina Bar Center in Cary.

Based on a meeting I attended last Thursday as a member of the Triangle Government Affairs Committee of ABC of the Carolinas, the proposed system will utilize “Quick Response” (“QR”) code technology to facilitate the filing of preliminary lien notices.  Here’s how I understand the technology would work: potential lien claimants would download a suitable QR code reader app onto their iPhones, iPads, Androids or similar devices.  The claimant would then find the project’s QR code in the permit box, using its smartdevice to scan the code.  The app would then populate all of the project information necessary for the potential lien claimant to fill out and deliver to the lien agent a bit of information about itself, its contract and its scope.  The system would then deliver to the potential lien claimant a receipt of the transaction.

Sounds simple enough, at least in theory.  But what about in the real world?

• Would use of the technology by owners and their title insurers be mandatory or voluntary?
• How would this technology simplify the preliminary lien notice process of an employer whose employees are not furnished with smartphones or comparable devices?
• How would material suppliers, who might never step foot on the project site, make use of the app?
• Would general contractors be able to use the app to determine the identities of second-tier and lower subs on the project?
• How does the NC Land Title Association intend to educate North Carolina’s construction industry about the app in advance of the lien agent statute’s effective date of April 1, 2013?

These are just a few of the questions I envision being asked at Thursday’s demonstrations.

I encourage all interested parties concerned about implementation of the lien agent statute to attend Thursday’s demonstrations and seek clarification on all of the questions they may have about the technology.  If you plan to attend the 10:00 a.m. demonstration, please send an RSVP to Bill Patterson, staff attorney for the NC General Assembly’s Research Division, at Bill.Patterson@ncleg.net by the close-of-business on Tuesday, February 19.

UPDATED 2/25/2013: LiensNC, LLC, the provider of the online app described in this post, has launched its webpage, which you can find here.  Although the site is still under construction, a narrated PowerPoint overview introducing the features of the online app can be downloaded.  It’s 5 minutes very well spent.

I’ll have additional perspectives on the lien agent statute and this new online app as the April 1, 2013 effective date for the legislation draws nearer.