What are Mechanic’s Liens and How Do They Protect Unpaid Workers?

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I.                Introduction

The typical construction site involves inherent power imbalances, and thus payment disputes are common.  Owners and financiers control the project funding, and General Contractors and higher-tier subcontractors control the payment flow.  Construction workers and lower-tier subcontractors often lack bargaining power.  Within this framework, some construction businesses engage in bad business practices like withholding final pay, failing to pay overtime, misclassifying employees as independent contractors, and hiding behind “cash pay” arrangements with no documentation. 

However, federal and state labor laws protect workers, regardless of immigration status, especially in many wage-related contexts.  In North Carolina, one of the most important legal protections that “levels the playing field” for unpaid construction workers is the N.C. Mechanic’s Lien. 

II.             What is a Mechanic’s Lien and how does it work?

Generally, a lien is a legal claim or hold on property, like real estate, used to secure payment of a debt or obligation.  It gives the lienholder the right to take or sell the property if the debt isn’t paid. 

In North Carolina, the Claim of Lien on Real Property, colloquially known as the “Mechanic’s Lien,” is a specific type of statutory lien.  See N.C. Gen. Stat. § 44A‑7, et seq. (“Liens of Mechanics, Laborers, and Materialmen Dealing with Owner”).  A Mechanic’s Lien is a legal claim against real property securing payment for labor or materials provided to improve that property. When a contractor, subcontractor, or supplier performs work on real estate, they obtain inherent lien rights in that real estate. 

In laymen’s terms, any unpaid construction trade worker who worked at a project site can generally assert a Mechanic’s Lien against that project site.   Thus, the Mechanic’s Lien is a very powerful payment enforcement tool for unpaid workers. 

Unpaid workers can assert their Mechanic’s Lien rights by filing a Claim of Lien on Real Property at the County Courthouse where the real estate/project site is located.  The lien then legally attaches to the real estate, and at this point, the unpaid worker becomes the “Lien Claimant.”  

Mechanic’s Lien Deadlines are strict! Missing them can eliminate your lien rights.  In North Carolina, Claim of Lien on Real Property must be filed within 120 days of the date of last work performed at the real estate. The Lien Claimant must then perfect their Claim of Lien within 180 days of last work performed by filing a lawsuit.  If the lawsuit is successful, then the Lien Claimant can force the sale of the attached real estate to satisfy their debt, in a process similar to bank foreclosure. 

So if you’re an unpaid worker, make sure to file your Mechanic’s Lien before the 120-day lien deadline!  Don’t get tricked past the 120-day lien deadline by employer/customer elusiveness and vague payment promises.

Unpaid construction workers also have other types of liens and claims that they can assert.  For instance, unpaid subcontractors may also assert a Lien on Funds owed up the payment chain.  In public projects secured with payment bonds, unpaid workers can submit a Claim on Payment Bond.  A skilled construction law attorney can best advise you about your particular rights and claims.

III.           What are the advantages of Mechanic’s Liens?

Generally, the Mechanic’s Lien creates leverage for the unpaid worker by giving the worker a legal interest in the property.  The Mechanic’s Lien operates as a cloud on property title, preventing sale or re-financing until it’s resolved.  The unpaid worker can ultimately enforce their Mechanic’s Lien through foreclosure, if needed. 

In this way, an unpaid worker can effectively use a Mechanic’s Lien to bring the entire pending construction project to a grinding halt, unless and until the owners and financiers address the unpaid worker’s payment issues.  This encourages “upstream” parties like the General Contractor, owners, and financiers to resolve worker payment disputes quickly.  In sum, the Mechanic’s Lien can transform a simple unpaid invoice into a valuable secured claim tied to real property.  Sometimes, even the mere threat of a Mechanic’s Lien can get a worker paid.

Attorney Isakoff has years of successful experience in construction litigation, and regularly represents unpaid construction workers in Mechanic’s Lien cases.  At The Law Offices of Peter D. Isakoff, we know how to navigate the complexities of NC lien laws to help unpaid construction workers assert their lien rights and get paid for an honest day’s work.  If you’re an unpaid construction worker in need of legal representation, please contact The Law Offices of Peter Isakoff anytime, day or night, at (336) 863-8348 (Main) or (336) 864-9115 (Español).

DISCLAIMER: The information in this article is provided for informational purposes only. It is not offered as and does not constitute legal advice. The accuracy of the information may change pending changes in applicable law. If you have questions about a specific matter, you should contact a lawyer. The use of this article or any information provided in it does not establish any lawyer/client relationship.