N.C. Gen. Stat. » Chapter 44A
NC General Statutes

N.C. Gen. Stat. § 44A-20 (2026)

Duties and liability of obligor

✓ current as of July 2026
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(a) Upon receipt of the notice of claim of lien upon funds provided for in this Article, the obligor shall be under a duty to retain any funds subject to the lien or liens upon funds under this Article up to the total amount of such liens upon funds as to which notices of claims of lien upon funds have been received.

(b) If, after the receipt of the notice of claim of lien upon funds to the obligor, the obligor makes further payments to a contractor or subcontractor against whose interest the lien or liens upon funds are claimed, the lien upon funds shall continue upon the funds in the hands of the contractor or subcontractor who received the payment, and in addition the obligor shall be personally liable to the person or persons entitled to liens upon funds up to the amount of such wrongful payments, not exceeding the total claims with respect to which the notice of claim of lien upon funds was received prior to payment.

(c) If an obligor makes a payment after receipt of notice of claim of lien on funds and incurs personal liability under subsection (b) of this section, the obligor shall be entitled to reimbursement and indemnification from the party receiving such payment.

(d) If the obligor is an owner of the property being improved, the lien claimant shall be entitled to a claim of lien upon real property upon the interest of the obligor in the real property to the extent of the owner's personal liability under subsection (b) of this section, which claim of lien on real property shall be enforced only in the manner set forth in G.S. 44A-7 through G.S. 44A-16 and which claim of lien on real property shall be entitled to the same priorities and subject to the same filing requirements and periods of limitation applicable to the contractor. The claim of lien on real property is perfected as of the time set forth in G.S. 44A-10 upon satisfaction of those requirements set forth in G.S. 44A-11. A lien waiver signed by the contractor prior to a subcontractor's perfecting its claim of lien on real property in accordance with G.S. 44A-11 waives the subcontractor's right to enforce the contractor's claim of lien on real property, but does not affect the subcontractor's right to a claim of lien on funds or the subcontractor's right to a claim of lien on real property allowed under this subsection. The claim of lien on real property as provided under this subsection shall be in the form set out in G.S. 44A-12(c) and shall contain, in addition, a copy of the notice of claim of lien upon funds given pursuant to G.S. 44A-19 as an exhibit together with proof of service thereof by affidavit, and shall state the grounds the lien claimant has to believe that the obligor is personally liable for the debt under subsection (b) of this section.

(e) A notice of claim of lien upon funds under G.S. 44A-19 may be filed by the obligor with the clerk of superior court in each county where the real property upon which the filed notice of claim of lien upon funds is located for the purpose of discharging the notice of claim of lien upon funds by any of the methods described in G.S. 44A-16.

(f) A bond deposited under this section to discharge a filed notice of claim of lien upon funds shall be effective to discharge any claim of lien on real property filed by the same lien claimant pursuant to subsection (d) of this section or G.S. 44A-23 and shall further be effective to discharge any notices of claims of lien upon funds served by lower tier subcontractors or any claims of lien on real property filed by lower tier subcontractors pursuant to subsection (d) of this section or G.S. 44A-23 claiming through or against the contractor or higher tier subcontractors up to the amount of the bond. (1971, c. 880, s. 1; 1985, c. 702, s. 2; 2005-229, s. 1; 2012-175, s. 8; 2013-16, s. 4.)

 

Notes of Decisions
Cited in 19 cases, 1975–2019 · leading case: O & M Indus. v. Smith Eng'g Co., 624 S.E.2d 345 (N.C. 2006).
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O & M Indus. v. Smith Eng'g Co., 624 S.E.2d 345 (N.C. 2006). · cites it 23× “The issue before the Court for review is whether the Court of Appeals properly reversed the trial court’s entry of summary judgment for plaintiff under N.C.G.S. § 44A-20. For the reasons stated herein, we reverse the decision of the Court of Appeals and remand for consideration…”
Elec. Supply Co. of Durham, Inc. v. Swain Elec. Co., 403 S.E.2d 291 (N.C. 1991). · cites it 6× “In some circumstances, a first, second, or third tier subcontractor may also be entitled to a lien against the real property of the owner by subrogation if the owner refuses to pay for the labor and materials furnished by the subcontractor. N.C.”
Pete Wall Plumbing Co. v. Sandra Anderson Builders, Inc., 721 S.E.2d 663 (N.C. Ct. App. 2011). · cites it 16× “" N.C. Gen.Stat. § 44A-20 (2009). A suggested format for a notice of claim of lien upon funds is contained in N.”
Martin Architectural Prods., Inc. v. Meridian Constr. Co., 574 S.E.2d 189 (N.C. Ct. App. 2002). · cites it 5× “Upon receipt of such notice, DUFCU was “under a duty to retain any funds subject to the lien or liens under this Article up to the total amount of such liens as to which notice has been received.” N.C. Gen. Stat. § 44A-20(a) (2001).”
Contract Steel Sales, Inc. v. Freedom Constr. Co., 362 S.E.2d 547 (N.C. 1987). · cites it 12× “N.C.G.S. § 44A-20(a). If the owner pays the contractor after receiving a proper notice of claim of lien, the owner becomes an "obligor .”
Carolina Bldg. Servs.' Windows & Doors, Inc. v. Boardwalk, LLC, 658 S.E.2d 924 (N.C. 2008). · cites it 6× “Under our lien statutes, there are only two methods by which a subcontractor may assert lien rights against the owner's real property: (1) a direct liability lien pursuant to N.C.G.S. § 44A-20(d); and (2) a subrogation lien pursuant to N.”
Piedmont Rebar, Inc. v. Sun Constr., Inc., 564 S.E.2d 281 (N.C. Ct. App. 2002). · cites it 6× “§ 44A-18 and N.C.G.S. § 44A-20; or (2) by subrogation under N.”
Mace v. Bryant Constr. Corp., 269 S.E.2d 191 (N.C. Ct. App. 1980). · cites it 9× “44A-18(1) provides that a first tier subcontractor who furnishes labor or materials at a job site is entitled to a “lien upon funds which are owed [by the owner of the improved real property] to the contractor with whom the first tier subcontractor dealt.”
Con Co, Inc. v. Wilson Acres Apts., Ltd., 289 S.E.2d 633 (N.C. Ct. App. 1982). · cites it 4× “44A-18 and G.S. 44A-20 or by subrogation under G.S. 44A-23.”
Lewis-Brady Builders Supply, Inc. v. Bedros, 231 S.E.2d 199 (N.C. Ct. App. 1977). · cites it 3× “44A-20(a) would impose no duty upon owner, and it follows that G.S. 44A-20 (b) would impose no personal liability upon owner.”
Watson Elec. Constr. Co. v. Summit Companies, LLC, 587 S.E.2d 87 (N.C. Ct. App. 2003). “44A-18 and G.S. 44A-20 or by subrogation under G. S.”
Trs. of the Garden of Prayer Baptist Church v. Geraldco Builders, Inc., 336 S.E.2d 694 (N.C. Ct. App. 1985). “*115 G.S. 44A-20(a). In the event the funds owed by the owner to the contractor are insufficient to satisfy the full amount of the valid lien claims, the lien claimants are entitled to share the funds on a pro rata basis.”
Show all 19 citing cases →
— N.C. Gen. Stat. § 44A-20(a) — 9 cases
O & M Indus. v. Smith Eng'g Co., 624 S.E.2d 345 (N.C. 2006). “The issue before the Court for review is whether the Court of Appeals properly reversed the trial court’s entry of summary judgment for plaintiff under N.C.G.S. § 44A-20. For the reasons stated herein, we reverse the decision of the Court of Appeals and remand for consideration…”
Contract Steel Sales, Inc. v. Freedom Constr. Co., 362 S.E.2d 547 (N.C. 1987). “N.C.G.S. § 44A-20(a). If the owner pays the contractor after receiving a proper notice of claim of lien, the owner becomes an "obligor .”
Martin Architectural Prods., Inc. v. Meridian Constr. Co., 574 S.E.2d 189 (N.C. Ct. App. 2002). “Upon receipt of such notice, DUFCU was “under a duty to retain any funds subject to the lien or liens under this Article up to the total amount of such liens as to which notice has been received.” N.C. Gen. Stat. § 44A-20(a) (2001).”
Lewis-Brady Builders Supply, Inc. v. Bedros, 231 S.E.2d 199 (N.C. Ct. App. 1977). “44A-20(a) would impose no duty upon owner, and it follows that G.S. 44A-20 (b) would impose no personal liability upon owner.”
Trs. of the Garden of Prayer Baptist Church v. Geraldco Builders, Inc., 336 S.E.2d 694 (N.C. Ct. App. 1985). “*115 G.S. 44A-20(a). In the event the funds owed by the owner to the contractor are insufficient to satisfy the full amount of the valid lien claims, the lien claimants are entitled to share the funds on a pro rata basis.”
— N.C. Gen. Stat. § 44A-20(a)(b) — 1 case
Baumann v. Smith, 254 S.E.2d 627 (N.C. Ct. App. 1979).
— N.C. Gen. Stat. § 44A-20(b) — 5 cases
O & M Indus. v. Smith Eng'g Co., 624 S.E.2d 345 (N.C. 2006). “The issue before the Court for review is whether the Court of Appeals properly reversed the trial court’s entry of summary judgment for plaintiff under N.C.G.S. § 44A-20. For the reasons stated herein, we reverse the decision of the Court of Appeals and remand for consideration…”
Contract Steel Sales, Inc. v. Freedom Constr. Co., 362 S.E.2d 547 (N.C. 1987). “N.C.G.S. § 44A-20(a). If the owner pays the contractor after receiving a proper notice of claim of lien, the owner becomes an "obligor .”
Mace v. Bryant Constr. Corp., 269 S.E.2d 191 (N.C. Ct. App. 1980). “44A-18(1) provides that a first tier subcontractor who furnishes labor or materials at a job site is entitled to a “lien upon funds which are owed [by the owner of the improved real property] to the contractor with whom the first tier subcontractor dealt.”
Contract Steel Sales, Inc. v. Freedom Constr. Co., 353 S.E.2d 418 (N.C. Ct. App. 1987).
Mace v. Bryant Const. Corp., 269 S.E.2d 191 (N.C. Ct. App. 1980).
— N.C. Gen. Stat. § 44A-20(c) — 1 case
O & M Indus. v. Smith Eng'g Co., 624 S.E.2d 345 (N.C. 2006). “The issue before the Court for review is whether the Court of Appeals properly reversed the trial court’s entry of summary judgment for plaintiff under N.C.G.S. § 44A-20. For the reasons stated herein, we reverse the decision of the Court of Appeals and remand for consideration…”
— N.C. Gen. Stat. § 44A-20(d) — 4 cases
Carolina Bldg. Servs.' Windows & Doors, Inc. v. Boardwalk, LLC, 658 S.E.2d 924 (N.C. 2008). “Under our lien statutes, there are only two methods by which a subcontractor may assert lien rights against the owner's real property: (1) a direct liability lien pursuant to N.C.G.S. § 44A-20(d); and (2) a subrogation lien pursuant to N.”
Mace v. Bryant Constr. Corp., 269 S.E.2d 191 (N.C. Ct. App. 1980). “44A-18(1) provides that a first tier subcontractor who furnishes labor or materials at a job site is entitled to a “lien upon funds which are owed [by the owner of the improved real property] to the contractor with whom the first tier subcontractor dealt.”
Interior Distributors, Inc. v. HARTLAND CONST. CO., INC., 449 S.E.2d 193 (N.C. Ct. App. 1994).
Mace v. Bryant Const. Corp., 269 S.E.2d 191 (N.C. Ct. App. 1980).
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