The state’s constitution provides for the filing of liens against real property to secure payment to those supplying labor or materials on a project. The lien law does not apply to federal or state public works.

Lien Defined A lien is a right to secure payment for work or materials furnished to improve real property (land or buildings). A properly filed lien results in an unpaid obligation recorded against the title to the property similar to a mortgage on a building. If the obligation is not satisfied, the sale of the property may be forced to satisfy the lien.

Who May Lien? To be able to file a lien to secure an amount die, a contract with the owner is not necessary. Those without a contract with the owner who supply labor, professional design or surveying services, materials or furnishes rental equipment at the site of improvement may also file.

Liens may be filed against the real property or, in the case of subcontractors, against funds owed to the party that is obligated to the subcontractor.

The process to perfect or properly complete a lien filing may require several specific steps filed with various entities, in an exact time frame. Courts generally require strict compliance with the provisions of the lien law and will dismiss improperly filed liens.

The following is an overview of the key elements of the lien law. It is not meant to be a complete description of the steps necessary to perfect a lien. Legal advice should be obtained for specific help in protecting and asserting lien rights.

FILING CLAIMS

Those entitled to file a lien against real property must file the lien with the Clerk of the Superior Court in the county where the project is located. The lien must be filed within 120 days after the last furnishing of labor or materials at the project.

The Claim of Lien must contain the following information:

• the name and address of the person claiming the lien;

• the name and address of the owner of the property at the time the claim is filed;

• a description of the property upon which the lien is claimed;

• the name and address of the person with whom the claimant contracted for the furnishing of labor or materials;

• the date when labor or materials were first furnished by the claimant;

• the date when labor or materials were last furnished; and

• a general description of the labor performed or materials furnished and the amount claimed.

An action in court against the owner for enforcement of the lien must be started within 180 days after the last furnishing of labor or materials at the project.

A lien filed against a property may be discharged by any of the following methods:

• The claimant may acknowledge the satisfaction of the lien indebtedness before the clerk of the superior court;

• The owner may submit an instrument of satisfaction from the lien claimant to the clerk of the superior court;

• The failure by the claimant to enforce the lien within the time required;

• The filing in the office of the clerk of the superior court, a court judgment, or a decree showing the dismissal of the claimants lien;

• The depositing of an amount equal to the lien with the clerk of the court; or

• The filing of a surety bond in the amount of 125% of the lien.

To file a lien on funds, the subcontractor must serve a notice of claim on the party owing the funds, as well as the owners of the property and all others above the subcontractor in the contractual chain. The subcontractor’s notice of claim of lien shall contain the following information:

• the name and address of the person claiming the lien;

• a general description of the property involved;

• the name and address of the person with whom the claimant contracted;

• the name and address of each person for whom subrogation rights are claimed (applicable if the claimant is second or third tier subcontractor);

• a general description of the contract and the person against whose interest the lien is claimed; and

• The amount claimed.

The notices of claims of liens by first, second, or third tier subcontractors must be on a form substantially, as shown in Exhibit 1.

The party who receives notice of claim must withhold payment in the amount of the claim or face liability to the claimant.

FILING A NOTICE OF CONTRACT

A general contractor may be able to cut off the lien rights of sub-contractors by posting a “Notice of Contract” at the project and filing the notice with the county clerk within 30 days of obtaining a building permit. The form of the Notice of Contract shall contain the following information:

• the name and address of the contractor;

• the name and address of the owner of the property at the time the notice is filed;

• a general description of the real property to be improved; and

• The name and address of the person or entity filing the notice.

The subcontractor’s lien rights can be re-established if a “Notice of Subcontract” is sent to the general contractor and is posted at the project. The form of the Notice of Subcontractor shall contain the following information:

• the name and address of the subcontractor;

• a general description of the real property where the labor was performed or the materials furnished;

• a general description of the subcontractor’s contract including the names of the contracting parties;

• a description of the labor and materials furnished; and

• a request that the subcontractor be notified in writing by the contractor within five days of each payment by the contractor to the first tier subcontractor, the date of payment and the period covered.

The lien rights of lower tier subcontractors (second, third, etc.) can be cut off by the general, even if they have filed notices of subcontract, if the general notifies them within five days of any payments made to the first tier subcontractor.

FALSE CLAIMS

If any person receiving payments for an improvement to real property furnishes a false written statement of the sums due or claimed for labor or materials furnished to the property, the person shall be guilty of a Class 1 misdemeanor.

Additionally, any person who knowingly causes, or attempts to cause, the filing of a lien or other document that is either not authorized by statue or intended to hinder, harass, or wrongfully interfere with another, shall be guilty of a Class 1 misdemeanor.