Tag Archives: Bankruptcy Fix

N.C. Liens/Bonds, They Are A-Changin’ Part IV: The Lien Agent Rises

In previous installments in this series, I discussed how last year’s lien and bond law revisions protect subs and suppliers via the “Bankruptcy Fix,” while also protecting prime contractors via double payment protection on bonded, public projects.

What about the title insurance industry?  Well, their legislative “holy grail” was protection from so-called “hidden liens,” and their quest succeeded when the North Carolina General Assembly approved a preliminary notice procedure that creates a new party soon to be integral to the mechanics’ lien preservation process: the owner’s “lien agent.”

While I’ve never questioned the need to address the “hidden lien” issue, I am squarely on record as opposing this particular legislation in the particular manner in which it was passed.  Candidly, however, that battle’s been lost, and the industry’s focus needs to be on complying with the new regime.  Indeed, the statutory provisions governing the preliminary lien notices called for by the legislative revisions go into effect for virtually all private construction projects for which the first construction work commences today, April 1, 2013 (happy April Fool’s Day!), or later.

In other words, the horse it out of the barn, and it ain’t goin’ back in.  Time to saddle up and ride.  And so this post provides an introduction to the new preliminary lien notice each potential lien claimant must provide to the owner’s “lien agent” in order to fully preserve future lien rights under North Carolina’s mechanics’ lien statutes.  I’ll start with a quick primer on the problem of hidden liens, and then move through the basics of the new statute from the perspective of each party in the contractual chain, from the top down.  I’ve attached a multitude of links that should prove helpful in transitioning to this brave new world of mechanics’ lien preservation. Continue reading

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Filed under Design Contracts, Feature story, Lien Law, State law, policy & news, Subcontractors

N.C. Liens/Bonds, They Are A-Changin’ Part II: The (Bankruptcy) Fix Is In

Back in 2010, when a group of construction, real property and bankruptcy lawyers first started meeting to consider potential revisions to North Carolina’s lien and bond statutes, one of the driving forces behind those discussions — particularly for those who typically represent subcontractors and suppliers — was protection for downstream project participants after an upstream player filed for bankruptcy.  Such protection, known commonly as the “Bankruptcy Fix,” was included in the package of revisions signed into law last summer.  This post explores the origins of the Bankruptcy Fix and discusses how the 2012 lien law legislation protects the right of subs and suppliers to serve a Notice of Claim of Lien Upon Funds even after a party above them in the contractual chain files for bankruptcy.

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Filed under Feature story, Federal law, policy & news, Lien Law, State law, policy & news