{"id":31549,"date":"2008-03-26T16:35:41","date_gmt":"2008-03-26T21:35:41","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/uncategorized\/rental-equipment-charges-are-lienable.html"},"modified":"2008-03-26T16:35:41","modified_gmt":"2008-03-26T21:35:41","slug":"rental-equipment-charges-are-lienable","status":"publish","type":"corporate","link":"https:\/\/corporate.findlaw.com\/business-operations\/rental-equipment-charges-are-lienable.html","title":{"rendered":"Rental Equipment Charges are Lienable"},"content":{"rendered":"
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Prior to January of 1993, most construction lawyers believed that a lessor of rental equipment was entitled to assert a mechanic.s lien for charges for rental equipment used to improve real property. In January of 1993, however, the North Carolina Court of Appeals ruled that the lessor of a crane for use by a subcontractor on a construction project was not<\/u> entitled to assert a lien for unpaid rental charges. Southeastern Steel Erectors, Inc. v. Inco, Inc.<\/u>, 108 N.C. App. 429, 424 S.E.2d 433 (1993).
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Inco, Inc. (.Inco.) had supplied rental equipment, a crane, to Southeastern Steel Erectors, Inc. (.Southeastern.), a second-tier subcontractor on a project in Vance County. The rental agreement indicated that Inco was going to use the crane on .various jobs.. A dispute arose between Southeastern and Inco and Southeastern stopped making rental payments to Inco. Inco then asserted a lien on funds and a lien against real property as a third-tier subcontractor. Our Court of Appeals held that Inco was not entitled to assert any lien rights on the project for two reasons. First, Inco was not a .subcontractor. because it did not contract with Southeastern to .improve. the real property. Rather, it simply leased a crane to Southeastern to be used on .various jobs.. Second, the Court determined that the furnishing of a crane pursuant to a rental agreement does not constitute the furnishing of .labor or materials. which is a requirement for the filing of a lien. The Court looked at the .common and ordinary meaning. of .labor. and .material.. It found: (1) .furnishing labor. means providing the manpower to do a job and does not include rental equipment, and (2) .material. means .something that is capable of becoming part of the real property.. Rental equipment did not fit this definition.<\/span><\/p>

North Carolina.s statutory payment bond, which is required on public projects, defines .labor or materials. to include .the rental of equipment . . . directly utilized in the performance of the work. . . .. Thus, an equipment lessor can assert a claim against the payment bond required on a public project. In light of this specific inclusion in the payment bond statute, the Court found the omission of similar language from the definition of .labor. and .materials. in the mechanic.s lien statute to be indicative of legislative intent not to provide lien rights for equipment lessors.<\/span><\/p>

With help from the American Subcontractors Association, the legislature undertook to address this omission during the 1996 Session. House Bill 1163 amended Chapter 44A to include .rental of equipment directly utilized on the real property in making the improvement,. as a part of the definition of .improve.. Also, the legislature expanded the class of those who may file a lien on real property and on funds to include, in addition to one who .furnishes labor . . . or furnishes materials,. one who .furnishes rental equipment.. The effect of these amendments is that a lessor of rental equipment can lien a project and project funds to the same extent that a laborer and materialman can and to the same extent that a lessor of rental equipment can file a claim against a payment bond provided for a public project. These changes became effective October 1, 1996, and apply to lien rights arising on or after that date.<\/span><\/p><\/div>
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These legislative changes only address one of the problems with the Inco lien claim. They do not assure a lessor of rental equipment, or any other supplier for that matter, of the right to assert a lien where the rental agreement simply refers to .various projects.. The same would apply to goods supplied .on account for various projects.. Our mechanic.s lien statute permits a lien to be filed by one who contracts with another to improve real property. According to the court in Southeastern Steel<\/u>, this means .specific. real property. Thus, it is important in writing rental agreements or establishing rental accounts or open accounts that the lessor or supplier have its customer specifically identify the project or projects on which the equipment is to be used. Even though this may be difficult and the customer may not be able to make this distinction clearly at first, it is important to get this information in the beginning to preserve mechanic.s lien rights and facilitate later collection efforts.<\/span><\/p>

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Prior to January of 1993, most construction lawyers believed that a lessor of rental equipment was entitled to assert a mechanic.s lien for charges for rental equipment used to improve real property. In January of 1993, however, the North Carolina …<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_categories":[6467,6469,6471,6473],"class_list":["post-31549","corporate","type-corporate","status-publish","hentry","corporate_categories-business-operations","corporate_categories-business-operations__commercial-contracts","corporate_categories-business-operations__property","corporate_categories-business-operations__property__real-property"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate\/31549","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=31549"}],"wp:term":[{"taxonomy":"corporate_categories","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_categories?post=31549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}