NC Court Of Appeals Adds Lien Claims to List Of Substantial Rights That Are Immediately Appealable

In most cases, a party to a lawsuit unhappy with a ruling cannot appeal that decision until the lawsuit is completely done. The general rule is that only “final orders” can be appealed – meaning there is nothing the trial court can do in a particular case. There are a few exceptions to that general rule, where the Court will allow what’s known as an “interlocutory” appeal. One of those exceptions is when the order “deprives the appealing party of a substantial right which will be lost if the order is not reviewed before a final judgment is entered.” In a recent decision, the North Carolina Court of Appeals determined that an order canceling a claim of lien on real property is immediately appealable based on the substantial-right exception.

In RM Contractors, LLC v. Wiggins, the plaintiff-contractor filed a claim of lien and filed suit against the homeowner for non-payment of amounts owed. At the summary judgment stage, the trial court determined that it could not enter judgment on the amounts owing to either party but did enter a partial summary judgment striking the plaintiff’s claim of lien. The plaintiff then filed an interlocutory appeal of that partial summary judgment order.

The Court of Appeals’ opinion describes the potential ramifications of interlocutory orders on the priority position of lienholders. A lien based on the improvement to real property, as provided by statute, serves as a vital mechanism for securing payment for labor or materials furnished in connection with those improvements.

Filing and perfecting a claim of lien establishes priority, ensuring that the lienholder’s right to payment takes precedence over other creditors’ claims. However, an order canceling the claim of lien can jeopardize the lienholder’s priority position, potentially resulting in loss of proceeds from the sale of the property, which could not be remedied if the lienholder were forced to wait until the lawsuit’s conclusion to appeal. Therefore, the Court of Appeals determined that an order canceling a claim of lien was immediately appealable and ultimately reversed the trial court’s order striking the lien claim. Claims of lien on real property are a powerful tool for contractors and suppliers to ensure payment for their services or materials. The Court’s recent decision underscores their importance by describing them as substantial rights allowing for an immediate appeal.