Issue 6

Winter 1999

A PUBLICATION OR THE TITLE COMPANY OF NORTH CAROLINA

     

COMMONLY ENCOUNTERED LIENS AND PERIODS OF LIMITATION 

(This is a continuation of the article commenced in our last issue.  Set out below is an outline of the periods of limitation applicable to enforcement of certain liens and conditions affecting those periods.  Our prior issue dealt with judgments in state court proceedings.)

Judgment – federal court

  -          A judgment rendered in federal court is subject to state law rules noted above.  G.S. 1-237;28 U.S.C. Sec. 1962.

Judgement – for debt owed the United States or its agencies 

-          Is governed by Federal Debt Collection Procedures Act of 1990, effective May 28, 1991.  The act does not apply to a judgement entered more than 10 years before that date.  It does apply to a judgement entered 10 years or less before that date.  28 U.S.C. Sec. 3005.  Inconsistent state law is pre-empted.  28 U.S.C. Sec. 3003(d). 

-          Rules with respect to attachment to entireties property are the same as for judgements under state law.  28 U.S.C. Sec. 3010(a).  Judgement will be filed on judgement docket as in the case of judgements in state court.  28 U.S.C. 3201(a). 

-          Lien created by filing certified copy of abstract in manner applicable to federal tax lien.  28 U.S.C. Sec. 3201(a).

-          20 year period of effectiveness, apparently from filing.  28 U.S.C. Sec. 3201 (c) (1).

-          Lien may be renewed for one additional period of 20 years, upon filing of notice of renewal and this relates back to the filing of the judgment.  But court must approve this and extension must be filed before expiration of original 20-year period.  28 U.S.C. Sec. 3101(c)(2). 

-          Lien can be enforced by judicial sale or execution sale procedures referenced in the statutes.  28 U.S.C. 3202(e).

-          Assertion of exemption by judgment debtor stays the United States’ disposition of the property.  28 U.S.C. Sec. 3014(b)(3). 

General federal tax lien

-          10 years from the date of assessment.  26 U.S.C. Sec. 6502(a). 

-     There is a refiling period.  Fore example, if the tax is assessed on 1-2-92, the first day of the refiling period is February 1, 2001 and the last day of the refilings period is February 1, 2002.  That is because 26 U.S.C. Sec. 6323(g)(3) provides that the required refiling period is the one-year period ending 30 days after the expiration of 10 years after the date of the tax assessment.  The 10-year period was changed from the prior 6-year period by a law made effective November 5, 1990.

-          State law judgment lien rules 

applicable to effect on tenancy by the entireties apparently apply.

Mechanics’ lien

-          Must be filed within 120 days of last furnishing.  G.S. 44A-12(b).  Must be enforced within 180 days of last furnishing.  G.S. 44A-13(a).

-     If the action is filed within the 180 day period, is voluntarily dismissed without prejudice (before or after the expiration of the 180 day period) but is recommenced within one year of the dismissal (unless the stipulation of dismissal stipulates a shorter time), the lien enforcement action is deemed to be commenced within the 180 day enforcement period.  Newberry Metal Masters Fabricators, Inc. v. Mitek Industries, 333 N.C. 250, 424 S.E.2d 383 (1993); G.S. 1A-1, Rule 41.

Federal estate tax lien

-     10 years from date of death.  Lien need not be filed.

-          Certain “non-probate property” (for example, vested as tenancy by the entireties) is divested of the lien when property is conveyed to a purchaser or holder of a security interest.  26 U.S.C. Sec. 6324(a)(2).

Advalorem tax lien

-         10 years from the date taxes become due.  The procedure to collect must be commenced within that period.  G.S. 105-378(2).

-          Lien for taxes for real and personal property can attach to real property.  See G.S. 105-355.

Special assessment lien

-          Lien is effective upon confirmation.  G.S. 153A-195; G.S. 160A-228.

-          Lien must be enforced by procedure commenced within 10 years of assessment.  G.S. 160A-233; G.S. 153A-200. 

State estate inheritance tax lien

-          No lien for inheritance or estate taxes shall attach or affect the land after 10 years from date of decedent’s death.  Lien is not required to be filed.  G.S. 105-20; G.S. 105-16 G. S. 105-31. 

State gift taxes lien

-          10 years from the making of the gift.  Lien is not required to be filed.  G.S. 105-193. 

Other liens for state, county and municipal taxes

-          Must be filed like a judgment to be valid against purchasers and holders of deeds of trust.  No homestead exemption allowed.  G.S. 105-241, G.S. 105-242(c).

-          Period of lien is 10 years from date of docketing. 

Condominiums – unit owner’s association liens

-          Proceeding to enforce lien must be commenced within 3 years of docketing of lien.  G.S. 47C 3-116(c).

Planned unit development liens

-   Prior to enactment of the North Carolina Planned Community Act (see article below), there was some ambiguity as to whether the 3 year or 10 year statute of limitations for enforcement applied.  G.S. 1-52(1); G.S. 1-53(1); G.S. 1-47(2); G.S. 1-56.

-          The assessment lien provisions of new G.S. 47F 3-116, effective January 1, 1999, apply to planned communities created before that date, except for G.S. 47F 3-116(e) regarding costs and attorney’s fees for the prevailing party.  Session Law 1998, Ch. 199, Sec. 3. G.S. 47F 3-116(c) states that a lien will expire if not enforced within 3 years of its docketing.  But if the 10-year statute (see above) applied to a prior community’s lien, it is doubtful that the new law can effectively terminate it.  G.S. 47F 3-116(c) applies to new communities created after January 1, 1999. 

U.C.C.  security interest

-          Expires after 5 years from date of filing unless a continuation statement is filed within the 5-year period.  G.S. 25-9-403. 

Ambulance service liens

-          As to lien granted by G.S. 44-51.1, no action of enforcement can be commenced more than 10 years after services were furnished or more than 3 years after recipient’s death.

Betterments lien

-     It may be that the 10-year statute of limitations in G.S. 1-234 apply.  G.S. 1-340; G.S. 1-344.

Drainage lien

-          Enforceable as a mechanics’ lien.  G.S. 156-50; G.S. 156-15; G.S. 156-18; G.S. 156-21; G.S. 156-26; G.S. 156-28.

Lien for care of persons in state institutions

-          Lien expires 3 years from the last date of filing and not more than 3 years from death of confined person.  If judgment is obtained, judgment is not so barred but judgment period applies.  G.S. 143-117; G.S. 143-126; G.S. 143-126.1; G.S. 143-125. 

Miscellaneous liens

-          Liens for fines or costs reduced to judgment; judgments for child support or alimony; employment security commission obligations and Department of Agriculture obligations have the same effect and priority as a judgment lien.  G.S. 15A-1365; G.S. 50-13.4(f)(8); G.S. 50-16.7(a), (i) and (k); G.S. 96-4 and G.S. 94-10; G.S. 106-9.4.

Federal environmental liens

-          42 U.S.C. Sec. 9607(1) sets out the federal lien for CERCLA environmental liens.  Today, the notice of lien will be filed where judgments are docketed.  The lien continues until it is satisfied or becomes unenforceable through operation of the statute of limitations in 42 U.S. C. Sec. 9613(g).

An initial action for recovery of the costs referred to in 42 U.S.C. Sec. 9607 and secured by the lien if filed must be commenced (1) for a removal action, within 3 years after completion of the removal action, except that such cost recovery action must be brought within 6 years after a determination to grant a waiver under 42 U.S.C. Sec. 9604(c)(1)(C) for continued response action; and (2) for a remedial action, within 6 years after initiation of physicalon-site construction of the remedial action, except that, if the remedial action is initiated within 3 years after the completion of the removal action, costs incurred in the removal action may be recovered in the cost recovery action brought under the statute.  There are other statutes of limitation pertaining to damage to national resources or federal facilities or for contribution.

CONDOMINIUM ACT CHANGES

Effective January 1, 1999, G.S. 47C-3-113(a) has been amended to provide that unit owners associations need not maintain property insurance on individual units, but only on common elements.  However, if a building has units with horizontal boundaries described in the declaration, the insurance shall include the units but not improvements made by unit owners. If the insurance is not reasonably available, the owners must be notified. 

NORTH CAROLINA PLANNED COMMUNITY ACT PASSES 

This act (S. 801, Ch. 199) is effective January 1, 1999.  It will appear as Chapter 47F.  Generally, it applies to planned communities created on or after that date.  The act will be particularly helpful for subdivisions and townhouses.  The act does not apply to communities of 20 lots or less or where all lots are restricted exclusively to non-residential purposes, unless the declaration provides otherwise.  G.S. 47F-1-102.  Existent communities can elect for the act to apply with 67% of the votes in the association of lot owners, or less if the declaration so provides.  G.S. 47F-3-107(a), (b) and (c), pertaining to assessments, G.S. 47F-3-115, pertaining to common expense assessments and G.S. 47F-3-116, pertaining to lien enforcement provisions, except for G.S. 47F-3-11(e), apply to existent planned communities.

The definition of “planned community” in G.S. 47F-1-103(23) is noted.  An owner’s obligation to pay taxes, premiums or other expenses to benefit other lots is the key.  A condominium is not included.  However, a condominium can be part of a planned community.

SESSION LAW 1998 – CH. 228 SENATE BILL 1552 PASSES – SOME HIGHLIGHTS

G.S. 10A-11 has been amended to clarify that the official notary stamp or seal may contain a permanent imprinted or handwritten expiration date of the notary’s commission.  Registers of Deeds may act as notaries.  G.S. 10A-14(b).  G.S. 47-30(m) and (n), pertaining to a map that does not comply with G.S. 47-30(m), still allows a map to be attached for illustrative purposes to an instrument but has changed the wording of the disclaimer.

Other changes in the law will be discussed in our next issue.

 

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