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A Wealth of Information--The Analysis of Mr. Client

So that blankety-blank Owner, General Contractor or Upper-tier Sub thinks he can get by without paying me does he? I recall that my lawyer and our subcontractor association seminars have explained that I must file a lien within 120 days after I last furnished services or materials for the project-but what if it is 5:00 on day 119 after I last furnished for the project?

The first thing a lien lawyer wants to know is who are the contracting parties? Mr. Client gives the name of his owner, an "ABC Construction Co.", who everyone in town calls for new construction or improvements for ol' Lawyer to check his conflict system. Lawyer checks conflicts, and calls an assistant already at the courthouse to check the assumed name certificate index for "ABC"-but Ms. Paralegal cannot find one, nor does she find any deeds in that name. Curious and a bit concerned since it is almost lunchtime, Lawyer pulls up the street address of the property where Mr. Lower Tier Subcontractor performed improvements, which was a lot Lawyer thought he had checked deeds for the title line in the past. When he found the tax parcel of what he thought was the lot, the owner was shown as "XYZ Investments" (and surprisingly, NOT "ABC"). Being somewhat tech-savvy, Lawyer hit the NC Secretary of State's website to corporate search for the registered agent of "XYZ", which turned out to be Mr. Owner.

Now really concerned about time after realizing how quickly he will have to mobilize to file in time to beat the deadline, Mr. Lawyer calls Mr. Client back and says I am afraid to take this case as I will not have time to investigate properly and may not have time to file it given these developments. Next Mr. Lawyer has to give the bad news that he is not even sure the right name is on your contract for the Owner and that he does not want to file a lien or file suit against the wrong legal person and have the lien stricken by a judge.

What could Mr. Construction Client have done to help himself, and his legal advisors in case he later needs to file a lien and the lien enforcement lawsuit also necessary to file within 180 days after the date of last furnishing? The world is filled with information at your fingertips. The first concern of any business entity or sole proprietor contracting to provide services or supplies for another is to identify the correct party to put on your contract. Ace Salesman of Construction Client does not want to experience telling his supervisor that he trustingly put the individual name of owner on the contract documents because they had dealt together for years on lots, when this lot was owned by Owner's investment company (as in this case by "XYZ" instead of "ABC").

When the contract is negotiated is THE best time to determine the correct entity names. Have your customer give you a card and ask if that is the correct name you will fill in on your company's standard contract. If the owner or general contractor present the document and they ask you to have your company or you as a sole proprietor to sign, ask if the names for the Owner and General Contractor are correctly designated. It does not hurt to email these questions so there will be printable documentation of the answers you receive. Pull up the NC Secretary of State's website, check the information you received from Customer and print everything you see to go into your project file. The Secretary of State's website will provide the registered agent's name if you have to file a lien (the website will also tell the status of the entity-and if not "active" you have an early sign of potential troubles with the customer).

Also, since the 2012 revisions to the mechanics lien statutes, NCGS Section 44A-11.2(d) requires a permit to be posted at a prominent sign on the project premises. Similarly, the revisions added to Section 44A-11.2(e) require the sign to show the contact information for the "lien agent" on the premises sign ("Lien agent" was another new concept added to the 2012 revisions to the statutes). If filed correctly, much of this information is what Lawyer will need to help file the lien.

In the 1990's, NCGS Section 44A-23 included the opportunity to post a "Notice of Contract" at the sight, and also to file it at the Clerk's Office. The Notice of Contract should indicate the owner's proper name and contact location, the property description, and the general contractor's name and contact information. If you learn that this is a "notice of contract job", again much of the information you will need at the front end to check the contracting party designations is already available (as well as for Lawyer to utilize to file a lien if necessary), and it will impress Owner and enlightened general contractors when you as a salesman ask for such information. Similarly, you will be concerned if Owner or General Contractor look wary or confused as they try to avoid answering you directly.

Chances are good that with your inquiry into these specifics at the front-end of your contract discussions, you might save ever having to call Mr. Lawyer! It may also save the day if you carry a system reminder on all of your aged pay applications to alert your customer that you will have no choice but to call Lawyer to preserve your lien rights at 90 days in the future (so you give yourself and Lawyer ample time to act) if the account remains unpaid. If it is still necessary to file the lien and you have followed these suggestions, you may confidently tell Mr. Lawyer you have the bulk of the information he will need to put a lien claim together quickly even at such a late hour! However, why wait?!

Glenn S. Hayes
Practice areas: civil and construction litigation, personal injury litigation, estates (planning, administration, litigation), corporations, partnerships, taxation, general business

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