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Problems with Construction Liens in Oral Agreements with Contractors, Subcontractors, Homeowners and Businesses


Another reason for contractors to have express written contracts in their agreements with homeowners, businesses, general contractors, and subcontractors: Although you still may be able to recover for the work performed, there is a risk of losing the contractor’s most important protection: their lien rights.  Contact the construction litigation lawyers at Maginnis Law, PLLC at 919.526.0450 or visit our contact page to submit a new inquiry.

In North Carolina, one can recover for a breach of an express contract or a breach of a contract implied in fact.  A contract implied in fact takes place when sufficient facts exist to prove the existence of that agreement; often an oral contract.

North Carolina does allow recovery when there has not been a true meeting of the minds as to the terms of the contract if one party has been unjustly enriched.  This often happens where work is performed by a construction company on an oral agreement but they cannot prove the exact terms of that agreement to the appropriate legal standard.  If the homeowner or business receiving the work gains the benefit of the work, they must pay for the fair value of that work.

Although unjust enrichment claims protect a contractor’s right to get paid, it does not protect the most important right that a contractor has in construction litigation disputes, their lien rights, including their ability to file a Notice of Claim of Lien or a Notice of Claim of Lien Upon Funds.  There must be an actual contract in order to pursue your lien rights and the potential to recover attorney fees that comes with it.

The solution for contractors is to make sure that you have a valid, enforceable express contract before beginning work on a project.  Don’t risk having a court determine that your oral agreement has not earned protection under the lien statutes. If a dispute arises, homeowners or other contractors can attempt to extinguish your lien and your right to recover attorney fees that comes with it if they can prove that there wasn’t a meeting of the minds as to material terms.  The leverage for the contractor may well be gone at that point and resolving the dispute will become much more difficult.

Maginnis Law, PLLC is a Raleigh civil litigation firm with construction lawyers handling cases in Raleigh, Cary, Apex, Durham, Wake Forest, Morrisville and the rest of the Research Triangle area.  Contact the firm at 919.526.0450 to speak with a construction litigation attorney or visit our contact page to submit a new inquiry.

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