House Bill 707: What’s New With Lien Agents?

By Nan Hannah

In late June 2017, the North Carolina General Assembly passed legislation revising the Lien Agent statutes. Because these changes involve upgrades and changes to the website, the effective date for the new law is October 1, 2018.  So, what’s new?

44A-11.1(f) now provides for a designated lien agent to accept renewals and cancellations of Notices to Lien Agents.  What should catch your attention is the fact the original statute did not provide for either renewal or cancellation of such notices.

The significant changes are found in 44A-11.2 sections (q) through (v) which are all new.  Section (q) provides that a potential lien claimant “may” cancel a notice and would do so using “the Internet Web Site approved for such used by the designated lien agent.” Currently, there is only a single approved website and hopefully the wording of this statute will not invite the creation of others.  The wording becomes mandatory in the second sentence of (q) which provides that for one- or two-family residential dwellings cancellation must occur within “a reasonable time after the PLC has confirmed its receipt of final payment ….”

Subsection (r) also contains a significant addition in that it provides that a Notice to Lien Agent is discharged five years from the date it was delivered to the Lien Agent unless it is renewed.  The directions for renewing can be found in subsection (s) and provides for a single five-year extension.  There is no provision for a project, which might last longer than 10-years.  Subsection (u) indicates that, if a PLC cancels or fails to renew, the results in terms of lien right protections such as they exist via a Notice to Lien Agent are lost even if the PLC has a subsequent delivery.  The moral of the story is to warn clients to cancel at their peril. That being noted, subsection (v) clarifies that none of this matters if you file your lien.

And, the final provisions get to the driving force behind this odd set of revisions – the cost of designating a lien agent rises to $30.00 for residential and $58.00 for multi-family and commercial projects.