‘Lien waivers don’t waive lien laws,’ ASA tells NC Court of Appeals

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“The protections afforded contractors, subcontractors, and suppliers through mechanics’ and laborers’ liens are essential to the survival of the construction industry,” the American Subcontractors Association and ASA of the Carolinas said in an amici curiae, or “friends of the court,” brief filed with the North Carolina Court of Appeals.

The brief, filed in Preserve Holdings, LLC v. Superior Construction Corp. et al., asks the court to reverse a trial court’s decision flouting North Carolina law that establishes a contractor’s mechanic’s lien as effective on the date on which it first furnishes labor or materials.

“The law is clear, and ASA and ASA of the Carolinas are standing up for subcontractors’ valuable lien rights,” said 2010-11 ASA President Timmy McLaughlin, Austin Construction Company, Summerville, SC. “Lien waivers don’t waive lien laws.”

In the underlying case, a contractor, Superior Construction Company, constructed improvements for a multi-building condominium project, and filed suit on a lien after not being paid nearly $1 million. The construction lender obtained a lien for the project (based on a deed of trust) after the contractor started work. The lender convinced a court that the contractor’s decision to sign partial lien waivers changed the effective date, and therefore the priority, of the contractor’s lien claim. The lender claims that the contractor’s lien claim is effective only as of the first day for which the contractor has not executed partial lien waivers for progress payments.

In their brief, ASA and ASAC stated: “The Trial Court’s decision, if not reversed, will have a particularly severe and unnecessary harsh impact on the very subcontractors the lien statutes are designed to protect. A subcontractor’s right to lien a project, and the first furnishing date for a subcontractor’s lien is the date of first furnishing of the contractor. The Trial Court’s holding misapprehends the relation back doctrine, misreads the lien waiver, and ignores the effect of waivers on subcontractors.”

Eric Biesecker, Esq., Nexsen Pruet PLLC, Greensboro, prepared the brief for ASA and ASAC. ASA tapped its Subcontractors Legal Defense Fund to pay the fees associated with its filings in this case. The SLDF supports ASA’s critical legal activities to protect the interests of all subcontractors, and is funded solely by contributions. SLDF funds are invested in precedent-setting cases across the country. To learn more about this case and the Subcontractors Legal Defense Fund, visit www.sldf.net.

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