Recorded Does Not Mean Valid: North Carolina Property Owners Should Check Lien Filing Details

When the legislature gives a party certain rights, with prescribed ways to enforce them, one shouldn't be cavalier about adhering to those ways. A North Carolina Court of Appeals decision issued in July 2026 underscores that fact in the context of strict compliance with statutory requirements to claim construction liens on real property. In that case, K. Lee Builders, Inc. v. Thomas Scotte Barnes (No. COA25-1029), the failure of a contractor to follow statutory steps to perfect a claim of lien on real property affected not just the priority of the contractor's lien, but also its very validity.

Therefore, owners facing a claim of lien filed on their real property in North Carolina should be attentive to the details of the filing; the mere recording of a construction claim of lien in connection with a valid construction contract (even if there is a valid contractual claim) does not guarantee enforceability of the lien against real property. In fact, in the case at issue, a bond posted by the property owner to discharge the lien was required to be released to the property owner, not the contractor. The contractor may still collect the money that the jury awarded, but not by collection from the bond. Rather, it will have to file and execute upon its judgment – subject, of course, to the priority of any intervening claims against the real estate.

Background

North Carolina's statutory liens on real property (N.C. G.S. § 44A-7 et seq.) provide an important remedy for contractors and suppliers who furnish labor or materials to improve real property, namely the ability to make a claim of lien against the real property that relates back to the first furnishing of labor or materials.

Such a lien is an important burden on the real estate, with priority over other claims with later effective dates. But if a contractor does not adhere to the statutory requirements for filing such a claim, the lien may not be enforceable against the real estate. In K. Lee Builders, the court held that a claim of lien containing inaccurate first- and last-furnishing dates were inaccurate (with one date being incorrect by a mere few weeks) did not substantially comply with the lien statute, leaving the contractor without an enforceable lien against the property.

The dispute arose from a residential construction project in Henderson, North Carolina, where K. Lee Builders, a licensed general contractor, was retained by Barnes to build a home. When the parties later disagreed over payment obligations, K. Lee Builders sought to preserve its lien right by filing a claim of lien. The filing, however, listed September 5, 2022, as the first-furnishing date and August 25, 2023, as the last-furnishing date, both of which were incorrect. The evidence instead showed that construction began on November 2, 2022, and continued through at least September 13, 2023.

The court concluded that because the statute requires the claim of lien to state the dates on which labor or materials were first and last furnished and the contractor's stated dates were demonstrably inaccurate, the filing did not substantially comply with N.C. G.S. § 44A-12 and, therefore, could not support an enforceable lien.

Importantly, the court noted that N.C. G.S. § 44A-12(d) does not provide a procedure for amending a claim of lien after it is filed, which means the information recorded at the time of filing controls, and a contractor cannot correct defects through a subsequent amendment.

Also – and, again, importantly – the court noted that its holding in no way relies on a third party being prejudiced by the incorrect dates in the claim of lien. Instead, citing an earlier case, it explained that substantial compliance with the statutory requirements for filing a claim of lien require sufficient detail "to put interested parties, or parties who may become interested, on notice."

Next Steps and Considerations

This decision is an important reminder that a recorded claim of lien does not necessarily represent a valid lien. County recorders accept filings based on format, not factual accuracy, meaning that errors in dates, party names, property descriptions or other required information may go undetected at the time of recording but can still render the lien unenforceable.

Property owners, lenders, purchasers and title insurers should carefully evaluate any lien filed against real property rather than assume it is valid simply because it was recorded. Even if a contractor ultimately wins its contractual claim against the real property owner, important implications remain regarding the priority of competing claims of interest in the subject property and the contractor's ability to levy immediately on a lien or bond posted in lieu thereof, as opposed to first obtaining and executing upon a judgment.

Holland & Knight will continue to monitor developments involving North Carolina construction lien rights and related payment remedies. For further guidance on preserving, challenging or resolving construction lien claims in North Carolina, please contact the author or another member of the Real Estate Practice.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.