Under North Carolina lien law, how is a person who contracts directly with the property owner to improve real property classified?
Based on: NCGS 44A-7 (Definition of contractor)
NC Contractor Business & Law Exam · Liens & Bonds
NC Liens and Bonds: How Contractors Get Paid Under Chapter 44A (2026)
North Carolina gives contractors and suppliers two main tools to secure payment: a claim of lien on real property and, on bonded jobs, a claim on a payment bond, both in NCGS Chapter 44A. A person who contracts directly with the owner to improve real property is a contractor under NCGS 44A-7, and everyone below is a first, second or third tier subcontractor. The right to a lien is created by NCGS 44A-8 and extends to the improvement and the land under NCGS 44A-9. Read the statute free at ncleg.gov alongside Chapter 44A.
Practice
Free practice questions
A party who contracts with a general contractor, rather than with the owner, to improve real property is which tier under Chapter 44A?
Based on: NCGS 44A-7 (Definition of first tier subcontractor)
A supplier who contracts with a first tier subcontractor to improve real property holds what status under the lien statute?
Based on: NCGS 44A-7 (Definition of second tier subcontractor)
Under Chapter 44A, a third tier subcontractor is best described as a person who contracts with whom?
Based on: NCGS 44A-7 (Definition of third tier subcontractor)
Which of these activities falls within the statutory meaning of 'improve' real property under Chapter 44A?
Based on: NCGS 44A-7 (Definition of improve)
Do design and professional services by a registered architect, engineer, or land surveyor count as improving real property under Chapter 44A?
Based on: NCGS 44A-7 (Definition of improve)
Is the rental of equipment covered by the statutory definition of 'improve' under Chapter 44A?
Based on: NCGS 44A-7 (Definition of improve)
Under Chapter 44A, who qualifies as an 'owner' entitled to have an improvement lien apply to the property?
Based on: NCGS 44A-7 (Definition of owner)
The definition of 'owner' under Chapter 44A extends to which additional persons?
Based on: NCGS 44A-7 (Definition of owner)
Under Chapter 44A, an 'obligor' is defined as which of the following?
Based on: NCGS 44A-7 (Definition of obligor)
The tier ladder and what counts as improving property
The whole of Chapter 44A turns on where you sit in the chain, so the exam defines the tiers precisely in NCGS 44A-7. A contractor contracts with the owner. A first tier subcontractor contracts with the contractor, a second tier subcontractor contracts with a first tier subcontractor, and a third tier subcontractor contracts with a second tier subcontractor. The definition of improve is broad: it includes building, but also excavating, clearing, grading, filling and landscaping real property, furnishing materials including trees and shrubbery, the rental of equipment directly used on the property to make the improvement, and the design or professional services of architects, engineers, land surveyors and landscape architects registered under Chapter 83A, 89A or 89C. Real property under NCGS 44A-7 even reaches a leasehold interest, and an owner includes successors in interest and authorised agents. Getting these definitions right is what tells you whether a party has lien rights at all.
- Contractor: contracts directly with the owner (NCGS 44A-7).
- First tier subcontractor: contracts with the contractor (NCGS 44A-7).
- Second tier: contracts with a first tier subcontractor (NCGS 44A-7).
- Third tier: contracts with a second tier subcontractor (NCGS 44A-7).
The claim of lien, the lien agent and liens upon funds
A person who furnishes labour, professional design or surveying services, materials or rental equipment under a contract, express or implied, with the owner is entitled to a claim of lien on real property under NCGS 44A-8, and that lien secures all debts owing under the contract. Under NCGS 44A-9 the lien extends to the improvement and to the lot or tract on which it sits, to the extent of the owner's interest, and where an unenclosed lot adjoins other land of the same owner it reaches the area reasonably necessary for the convenient use of the building. Modern North Carolina practice adds the lien agent: when the cost of the undertaking reaches the threshold in NCGS 44A-11.1, the owner designates a lien agent, which is a title insurance company or title insurance agency, and potential lien claimants notify that agent. Serving the lien agent within the fifteen-day window in NCGS 44A-11.2 lets a claimant relate its lien back and preserve priority. Subcontractors who never contract with the owner still reach the money through a lien upon funds under NCGS 44A-18, which attaches to funds owed up the chain, with the duty to retain those funds falling on the obligor under NCGS 44A-20.
Payment bonds on public projects
Liens do not attach to public property, so North Carolina protects subcontractors on public jobs with payment bonds under Article 3 of Chapter 44A. NCGS 44A-26 requires the contracting body to obtain payment and performance bonds when the contract meets the statutory amount, and NCGS 44A-25 defines the contracting body, contractor, subcontractor and labour or materials for this purpose. A claimant enforces the bond by serving a notice of claim on the payment bond within 120 days under NCGS 44A-27, and a second or third tier subcontractor whose subcontract exceeds 20,000 dollars must also serve a notice of public subcontract so its claim is preserved. Suit on the bond has a one-year limitation under NCGS 44A-28, the surety's liability is capped under NCGS 44A-29, and a prevailing party may recover attorneys' fees under NCGS 44A-35. The exam frequently asks candidates to keep the private real-property lien and the public payment bond apart, because the deadlines and the property they touch are completely different.
| Point | Claim of lien (Ch 44A, Art 2) | Payment bond claim (Ch 44A, Art 3) |
|---|---|---|
| Typical project | Private improvement | Bonded public project |
| What it reaches | The improvement and the land (NCGS 44A-9) | The surety's payment bond (NCGS 44A-26) |
| Who can claim | Anyone furnishing labour or materials (NCGS 44A-8) | Contractors and subcontractors on the bonded job (NCGS 44A-27) |
| Key notice | Notice to lien agent, 15-day relation back (NCGS 44A-11.2) | Notice of claim within 120 days (NCGS 44A-27) |
| Suit limitation | Enforcement action under NCGS 44A-13 | One year (NCGS 44A-28) |
FAQ
Frequently asked questions
Who can file a mechanics' lien in North Carolina?
In North Carolina, NCGS 44A-8 gives a claim of lien on real property to anyone who furnishes labour, professional design or surveying services, materials or rental equipment under a contract, express or implied, with the owner. The lien secures all debts owing under that contract and extends to the improvement and the land under NCGS 44A-9.
What is a lien agent in North Carolina?
In North Carolina, NCGS 44A-7 defines a lien agent as a title insurance company or title insurance agency the owner designates under NCGS 44A-11.1 when the cost of the undertaking reaches the statutory threshold. A potential lien claimant who serves notice on the lien agent within the fifteen-day window in NCGS 44A-11.2 can relate its lien back and protect priority.
What are the subcontractor tiers under North Carolina lien law?
In North Carolina, NCGS 44A-7 sets four levels: a contractor contracts with the owner, a first tier subcontractor contracts with the contractor, a second tier subcontractor contracts with a first tier subcontractor, and a third tier subcontractor contracts with a second tier subcontractor. Your tier controls how you reach payment through a lien upon funds under NCGS 44A-18.
How does a subcontractor make a payment bond claim in North Carolina?
In North Carolina, NCGS 44A-27 lets a claimant on a bonded public project serve a notice of claim on the payment bond within 120 days, and a second or third tier subcontractor whose subcontract exceeds 20,000 dollars must also serve a notice of public subcontract. Suit on the bond must be brought within one year under NCGS 44A-28.
Can you put a lien on public property in North Carolina?
In North Carolina you cannot lien public property, which is why NCGS 44A-26 requires the contracting body to obtain a payment bond on qualifying public contracts. Subcontractors then claim against that bond under NCGS 44A-27 rather than filing a claim of lien on real property under NCGS 44A-8, and the two remedies carry different deadlines.