With the recent lien law changes, (that we have discussed in previous posts) the number of proper parties to a North Carolina lien enforcement action is not as many as it used to be.  This change to North Carolina lien law structure is interesting for a couple of different reasons — foremost because it is effective immediately.  That’s right, you don’t need to wait until 2013 for this one.

In  John Connor Construction, Inc. et al v. Grandfather Holding Company, Inc., et al, the North Carolina Court of Appeals invalidated a mechanic’s lien that was filed against an owner who owned the property at the end of the job, but not at the beginning.

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While this recent law change does not address the exact same situation as that case – the law change only outlines who is a proper party to an enforcement action, not who should be named on the lien — it is interesting to view the changes in the light of that decision.  At what point do parties need to hold an interest in the liened property to be included in an enforcement action?  The new Section 44A-13 states:

“a former owner of the improved property at the time the lien arose, who holds no ownership interest in the property at the time the action is commenced and against whom the plaintiff seeks no relief, is not a necessary party to the action…”

The section goes on to state that a subsequent purchaser of the property is not a necessary party to an enforcement action when the lien has been discharged by cash or bond.

This makes sense.  If a party has no interest in the property, or the cash/bond provided in lieu of the property, of course they are not a proper party — they have nothing to do with the enforcement action.  It’s impossible to recover based on an interest in a piece of property from a person with no interest in that property.  This is a common sense approach that, in my opinion, seems overdue.  But, better late than never.