Broker's Lien
On
October 1, 2011, a new law titled "Commerical Real Estate Broker Lien
Act" became effective in North Carolina. Briefly, the law allows
licensed real estate brokers to protect their commissions by filing
liens against commercial real property that is the subject of written
brokerage agreements signed on or after October 1, 2011. Read on
for the details.
First, the lien is available only against commercial real estate.
In general, the law defines such real estate as any real property "used
primarily for sales, office, research, institutional, warehouse,
manufacturing, industrial, or mining purposes or for multifamily
residential purposes involving five or more dwelling units."
Property meeting certain zoning requirements or intended for certain
uses may also be subject to liens.
Second, the lien is available only when there is a written agreement
between a licensed broker and the owner of the property that sets forth
the broker's duties to the owner, sets forth the conditions upon which
the broker earns compensation, and states the amount of compensation.
Third, the broker must create the lien by filing it within certain time
guidelines. A broker may file a lien after she has completed her
performance under the brokerage agreement, which, under most agreements,
will mean finding a ready, willing, and able buyer. The broker
must file the lien prior to the conveyance of the real property being
liened. Also, the broker may not file the lien earlier than 30
days before closing, unless the owner has breached the written brokerage
agreement.
Fourth, the broker must file and deliver the lien properly. The
lien must include the name of the broker claiming the lien, the name of
the owner, a description of the real property being liened, the amount
of the lien and whether it is due in installments, the broker's grounds
for the lien including a reference to the written agreement on which the
lien is based, an attestation that the statements in the lien are true,
and the broker's signature. The lien must be filed with the Clerk
of Court, and delivered by certified mail, return receipt
requested, or by other legal service of process. The proof of service
must also be filed with the Clerk.
Fifth, filing the lien is not enough to compel payment. If
the broker does not commence a lawsuit to enforce the lien within
18 months of filing it, the lien is lost.
I have covered the basics of the new Commercial Real Estate Broker Lien
Act. There are numerous subtleties and additional requirements in
the act that I do not have space to cover here. If you find
yourself in a situation where your commission is in jeopardy on a
commercial closing, I suggest you consult this new law with reference to
the specific facts of your situation. You will also have to judge
the impact of pursuing a lien on the relationship you have with your
client. I hope your closings continue to go smoothly without the
need of resorting to liens.
Do
not hesitate to contact me to receive more information on this topic or
to suggest topics for future editions of 'A Legal Moment'. You may not
rely on this content as legal advice for any specific situation, but
should instead contact an attorney for specific advice. |
