Q: Is it legal for a Builder to sell a house to a homeowner without first paying all subcontractors? GS code references?
The company I work for has furnished labor and materials in a house. Before the Builder made any sort of payment, and under my company's fruition, the builder sold the house to a homeowner. Now, of course, the builder is refusing payment. I have stuck a lien on the house; however, because the house is sold, it doesn't seem to be doing much good. I plan to take this to court but I can not find in the NC General Statutes where it says that a builder can not sell a house without first paying all subcontractors. It had been brought to my attention a few months ago by a few different attorneys that it is illegal, I just can not find where. Can anyone help with this?
A:
A builder can sell a house without paying the subs. The subs recourse is to sue the builder, and there is a powerful statutory mechanism for doing that. You're already aware of it: filing a lien and then enforcing the lien.
If you're a sub, you need to look into filing a claim of lien upon funds, not against the property. Read through Chapter 44A of the NCGS, specifically 44A-18 and on. If you're a GC and contracted directly with the owner, then a lien on the property is appropriate.
There are strict timelines for filing and enforcing a lien, whether you are a sub or a GC. If you don't keep your lien alive by acting soon enough, you can still sue, but recovery will be much more difficult. You take this to court by filing a complaint in superior court to enforce your lien. It's prudent to raise all legal claims that could arise in connection with the lien action, not merely a single claim for the enforcement of a lien. Additionally, if you act within the prescribed timelines, attorney fees can be awarded and assessed against the defendant in a lien action.
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