No one (with the exception of sadistic dentists) likes root canals, and no one (except lawyers) likes lawsuits. In the same way you can prevent (or limit) the need for root canals through proper flossing habits, you can limit the number of lawsuits you need to be involved in if you include everyone you should the first time around. For those involved in filing construction liens, this means that when you perfect a lien by filing the lawsuit, be sure you include everyone you need to include. A recent North Carolina Court of Appeals case demonstrates this principle in full living color.
In Lawyers Title Insurance Corp. v. Zogreo, LLC, __ N.C. App. __ (November 16, 2010), two contractors filed and perfected valid liens on a piece of property. They did not include, in the lawsuits to perfect the liens, the banks which had given funds to the property owner after they first began work on the property. The Court held that it was entirely proper not to include the banks (who held deeds of trust on the property to secure their loans); however, by the contractors’ failure to include them, they were forced to later litigate priority issues with the banks. This is because “if a subsequent encumbrancer is not joined [in the underlying lien perfection lawsuit], he is not bound by the judgment in the action between the contractor and the owner.”
Please see full law note below for more information.
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