Judgement Day for John Conner's Lien

New opinion that construction lawyers should take a quick read of can be found here: John Conner Construction Inc. v. Grandfather Holding Company, Inc.

Generally, a contractor has lien rights when the contractor has entered into an agreement with the "owner" of property and has provided labor and/or materials.  N.C.G.S. s 44A-8.  The "owner" of the property is one who holds an "interest" in the property.

Twenty-five years ago an issue came up as to whether a certain party was actually an "owner" in Carolina Builders Corp. v. Howard-Veasey Homes, Inc., 72 N.C. App. 224, 324 S.E.2d 626 (1985).  In that case, the "owner" of the property was only under contract to purchase the property, but had not yet closed.  Prior to closing, the "owner" contracted with a contractor to provide labor and materials to the property.  The Court concluded that the contractor had lien rights because the "owner" had an equitable interest in the property.

Yesterday, in John Conner Construction, and it is unclear what, if any responsibility the Terminator played in this, the Court of Appeals dismissed Conner's action to enforce a lien.  Setting aside the obvious reason, that a robot from the future was sent to sabotage the case, Mr. Conner had contracted with a non-owner of property, and that non-owner wasn't under contract to purchase the property.  Thus, the Court of Appeals held that Mr. Conner had no lien rights.  The fact that the non-owner later became the actual owner did not alter this result.

Bottom line: if a contractor enters into a agreement with a party that isn't yet under contract to purchase property, the contractor will have no lien rights.

Judge Hunter (from Greensboro) did provide a dissent, however, so the Supreme Court will have its chance to weigh in on this.