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What is a construction lien?

Nobody expects another to work for nothing, and when you perform a service, you are owed a payment. Paying for services rendered is the basis of the free-enterprise system in North Carolina, and throughout the U.S. So you may be likely to both understand and support a business or person who is not paid for completed work.

Whether you are a homeowner or business owner involved in renovation or new construction, you may discover that construction liens are regular facets of property law in this and many other states, according to FindLaw. As the property owner, you may not even be aware of an issue with subcontractor payments until you learn of the lien.

A construction lien works like a mechanic's lien, and typically, contractors and subcontractors use it to collect payment for work already completed. It can also be used by suppliers, such as lumber companies, who deliver materials to the site, and equipment providers, as well as architects and even surveyors. The filing of a lien can bring work to a screeching halt.

There is no priority of liens, which protects all entities with a hand in the project, putting them all on equal footing when it comes to payment. To keep things moving during a construction project, property owners should seek waivers or releases of lien from all suppliers and subcontractors. Otherwise, you risk having a subcontractor or supplier file a claim, even if you have already paid the general contractor. If that happens and the debt is valid, you can opt to pay what is owed or negotiate a payment plan, either of which will allow you to continue with construction.

This article covers essential information about construction liens that is general in nature. It is not meant to be considered legal advice.

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