Updated June 2026 | Public Projects: N.C. Gen. Stat. § 44A-27

On public construction projects in North Carolina (roads, schools, government buildings, courthouses, public utilities), mechanics liens are not available. Government property cannot be seized and sold to satisfy a private debt, so the entire private-project lien system simply does not apply.

The legislature substituted a different protection: a statutory payment bond that the contractor must obtain before starting work, and that unpaid claimants may sue on directly.

The public bond system is more straightforward than the private lien system in some ways. There are no property lien filings, no lien agent notices, and no subrogation tiers. But the deadlines are just as real, and one notice requirement, the Notice of Public Subcontract, is routinely missed by sub-tier claimants. Missing it permanently cuts off portions of their recovery before they know they need to act.

Scope: Public construction projects only: contracts with state departments, municipalities, counties, public universities, and other political subdivisions of North Carolina. Private-project payment claims use the mechanics lien system under §§ 44A-7 through 44A-23.

Quick Facts

• Who can claim: Any contractor, subcontractor at any tier, or supplier who performed labor or furnished materials on a bonded public project.
• No property lien available: § 44A-34 expressly excludes public bodies and public buildings from the mechanics lien articles, so the payment bond is the exclusive claimant protection.
• Bond threshold: Required when total project contracts exceed $300,000 (or $500,000 for state agencies and UNC) and an individual contract exceeds $50,000.
• Two notice tracks: Direct contract with the GC means no notice required, sue after 90 days. No direct contract with the GC means written Notice of Public Subcontract to the GC required within 120 days of last furnishing.
• 75-day lookback: Serve late and you lose the earlier portion of your claim (full details below).
• Hard suit deadline: 1 year from last furnishing, or 1 year from final settlement with the contractor, whichever is later.
• Attorneys’ fees: Available to the prevailing party.
• Key statutes: NCGS §§ 44A-25 through 44A-35.

Why There’s No Lien, and What Replaces It

Mechanics liens work by attaching to privately owned real property. They cloud title, they can stop a sale or refinancing, and ultimately they can force a court-ordered sale. That mechanism depends on the property belonging to someone who can lose it. Government-owned land cannot be privately liened or sold to satisfy a contractor’s unpaid invoice.

§ 44A-34 makes this explicit: the addition of Article 3 (the public bond article) shall not be construed as making the provisions of Articles 1 or 2 of Chapter 44A apply to public bodies or public buildings. The entire private lien apparatus, including real property liens, liens upon funds, and lien agent notices, does not reach public construction.

The substitute is a payment bond. When a contractor is awarded a qualifying public contract, the contracting body requires the contractor to obtain a payment bond from a licensed surety before work begins. The surety, an insurance company authorized to do business in North Carolina, guarantees that every person who furnishes labor or materials for the project will be paid, up to the face amount of the bond.

Unpaid claimants do not sue the government or try to lien the project site. They sue the contractor and the surety directly on the bond.

When Are Bonds Required?

§ 44A-26(a) establishes the thresholds:

• General rule: When the total amount of construction contracts awarded for any one project exceeds $300,000, every contractor or construction manager at risk with a contract exceeding $50,000 must provide performance and payment bonds.
• State agencies and UNC: For state departments, state agencies, and the University of North Carolina and its constituent institutions, the project-level threshold is $500,000 rather than $300,000. The individual contract threshold of $50,000 still applies.
• Discretionary bonds: A contracting body may require bonds on any construction contract at its discretion, even below these thresholds.

Both bonds are set at 100% of the construction contract amount:

• Performance bond (§ 44A-26(a)(1)): Conditioned on faithful performance of the contract. Protects only the contracting body. As a sub or supplier, the performance bond is not your remedy.
• Payment bond (§ 44A-26(a)(2)): Conditioned on prompt payment for all labor and materials for which the contractor or subcontractor is liable. This is the bond that protects you. It is solely for the protection of persons furnishing labor or materials.

Both bonds must be executed by a surety company legally authorized to do business in North Carolina, and they become effective upon awarding of the construction contract (§ 44A-26(b)).

Every contracting body must designate an official responsible for requiring these bonds. A designated official who fails to require a bond commits a Class 1 misdemeanor (§ 44A-32). If you’re on a project above the threshold and cannot confirm a bond exists, investigate early. A bond is an enforceable legal requirement, not an administrative courtesy.

What “Labor or Materials” Covers

The definition in § 44A-25(5) is deliberately broad. Labor or materials includes everything furnished or performed in the prosecution of the work, regardless of whether it becomes a component part of the finished improvement. The statute expressly covers:

• Gas, power, light, heat, oil, and gasoline
• Telephone services
• Rental of equipment, or the reasonable value of equipment used directly in performance of the work

Equipment lessors, fuel suppliers, and utility providers who might assume they don’t qualify should look again. If you supplied something consumed in performing the work, even if nothing you provided ended up physically embedded in the road or building, you likely qualify as a claimant.

Who Can Claim, and the Two-tier Notice Structure

§ 44A-25(1) defines “claimant” to include any individual, firm, partnership, association, or corporation entitled to maintain an action on the bond. § 44A-25(6) defines “subcontractor” to include any person who has contracted to furnish labor or materials to, or who has performed labor for, a contractor or another subcontractor.

There is no tier cutoff in the public bond article. Fourth-tier subs and remote material suppliers are not excluded the way they are from the private lien subrogation rules.

But there are two distinct procedural tracks based on your contractual relationship with the general contractor:

Track 1, direct contract with the GC: You contracted directly with the general contractor. You may bring an action on the payment bond in your own name once 90 days have passed since your last furnishing. No preliminary notice is required (§ 44A-27(a)).

Track 2, no direct contract with the GC: You contracted with a subcontractor rather than with the general contractor. You may bring an action only if you first served a written Notice of Public Subcontract on the contractor within 120 days of your last furnishing (§ 44A-27(b)). Miss that window and the bond claim is gone. The 1-year suit deadline does not save you if you never gave the required notice.

Knowing which track you’re on is the first question to answer on any public project.

Step 1: Get the Contractor’s Project Statement Before You Start

On every project covered by § 44A-26(a), the general contractor must give each subcontractor it engages a contractor’s project statement before work begins (§ 44A-27(f)(1)). Each subcontractor must pass that statement down to every sub it engages (§ 44A-27(f)(2)). The obligation runs through every tier, with no exception.

The statement must contain (§ 44A-27(f)(1)):

• The name of the project
• The physical address of the project
• The name of the contracting body
• The name of the contractor
• The name, phone number, and mailing address of an agent authorized by the contractor to accept service of requests for the payment bond, the Notice of Public Subcontract, and the notice of claim on the payment bond
• The name and address of the principal place of business of the surety issuing the payment bond

This document is your roadmap. It tells you who to serve notices on, where to request the bond, and which surety is backing the contract.

It is also a legal prerequisite. No agreement between a contractor and subcontractor, or between subcontractor tiers, is enforceable against the lower-tier party until the contractor’s project statement has been provided (§ 44A-27(f)(3)). If you never received it, raise that point. Your sub-agreement with the higher tier may not be binding on you until it is.

Ask for the contractor’s project statement on your first day of engagement on any public project. If you’re a sub-sub or lower, ask your direct contractor to pass it down. Keep it in your project file alongside your contract and your lien documents on private jobs.

Step 2: Notice of Public Subcontract, for Claimants Without a Direct Contract With the GC

If you contracted directly with the general contractor, you have no notice obligation, so skip to Step 3.

If you contracted with a subcontractor (not with the GC), the following applies.

The Requirement

You must give the general contractor written notice of claim on payment bond within 120 days of the day you performed your last labor or furnished your last materials (§ 44A-27(b)). The required form is the Notice of Public Subcontract. Without timely service of this notice, you cannot bring an action on the payment bond.

The 75-day Lookback Rule: Why Early Notice Matters

Serving within 120 days keeps the door open, but serving late costs you money. Unless the contractor failed to furnish you a copy of the payment bond after a proper request, your claim is limited to labor and materials provided within the 75 days before you served the notice (§ 44A-27(b)).

Work the math on a typical scenario. Suppose you have 150 days of work on the project. If you serve notice on day 119, your recoverable claim covers only work performed from day 44 onward; the first 44 days of work fall outside the 75-day lookback and are unrecoverable. If you serve notice on day 74, the lookback covers everything from day 1 and you lose nothing.

The 75-day rule is not a deadline. It is an invisible saw that trims the front end of your claim for every day you delay. Serve the notice the moment payment becomes uncertain. On a public project where you’re not being paid and you don’t have a direct contract with the GC, there is no reason to wait.

Exception: Contractor Withholds the Bond

If you properly requested a copy of the payment bond from the contractor and the contractor failed to provide it within 7 calendar days, the 75-day lookback rule does not apply (§ 44A-27(b)). You can recover for your full claim period regardless of when you served the notice.

Request the bond in writing, serve it the same way you’d serve the notice, and keep your proof. Contractor delay or non-response on the bond request is a defense to the lookback rule.

The $20,000 Exception

The Notice of Public Subcontract requirement does not apply to claims of $20,000 or less (§ 44A-27(e)). For claims exceeding $20,000, the notice requirement (and the 75-day lookback) applies only to the portion of the claim above $20,000. The first $20,000 of any claim is free from the notice obligation entirely.

What the Notice Must Include

Per § 44A-27(d), the Notice of Public Subcontract must state substantially the following:

1. Your name and address (as the subcontractor giving notice)
2. A general description of the real property: street address, tax map lot and block number, reference to a recorded instrument, or any description that reasonably identifies the property
3. A general description of your contract, including the names and addresses of the parties
4. A general description of the labor and materials you performed and furnished

A general description is sufficient for every element. No itemized breakdown is required. The form in the statute is a minimum; include the required elements, then sign and date it.

How to Serve It

Serve by certified mail or USPS signature confirmation, postage prepaid, addressed to the contractor at any regular place of business, or to the agent designated in the contractor’s project statement (§ 44A-27(c)). You may also serve by any method authorized by law for service of summons.

Keep your proof of delivery and note the exact date of service. That date determines how far back the 75-day window reaches.

Step 3: Get the Payment Bond Documents

The contractor’s project statement identifies the surety and the designated agent for service. If you need the actual bond, there are two paths.

From the contractor: Request it in writing, served the same way as the Notice of Public Subcontract. The contractor must provide a copy within 7 calendar days of receiving the request (§ 44A-27(b)). This is the path to triggering the contractor-failure exception to the 75-day lookback rule if the contractor stonewalls.

From the contracting body: Any person entitled to bring an action on the bond may require the contracting body to furnish a certified copy of the payment bond and the underlying construction contract. The contracting body must do so within 10 days of request and may charge a reasonable fee for the actual copying cost (§ 44A-31(a)). A certified copy from the contracting body is prima facie evidence of the contents, execution, and delivery of the bond (§ 44A-31(b)).

If you cannot locate the bond and cannot get it from the contractor, go directly to the contracting body. The contracting body’s obligation to furnish it is independent of the contractor’s cooperation.

Step 4: Bring the Bond Claim Action

The 90-day Waiting Period

You may not bring an action on the payment bond until 90 days have passed since your last furnishing of labor or materials (§ 44A-27(a)). This is a condition precedent: a floor, not a deadline. Its purpose is to give the contractor an opportunity to pay before litigation begins. If payment arrives during those 90 days, no suit is needed.

For indirect claimants (Track 2), the notice requirement and the 90-day waiting period operate together: serve the Notice of Public Subcontract as soon as payment becomes uncertain, then wait out the 90-day period before filing.

The 1-year Suit Deadline

No action on a payment bond may be commenced after the longer of:

• 1 year from the day you performed your last labor or furnished your last materials, or
• 1 year from the day on which final settlement was made with the contractor (§ 44A-28(b))

The “final settlement with the contractor” alternative is significant. Final settlement, meaning the contracting body’s official close-out and final payment to the GC, often occurs months or longer after your last day on the project. If final settlement happens 18 months after your last furnishing, your 1-year suit deadline runs from that final settlement date, giving you until 30 months after your last furnishing to file.

Track both dates: your last furnishing date and the date of final settlement with the contractor. Do not assume your window is only one year from your last day on site.

Venue

Every action on a payment bond must be brought in a court of appropriate jurisdiction in a county where the construction contract was or is to be performed (§ 44A-28(a)). For most projects, that is the county where the project site is located.

What a Successful Claim Recovers

A prevailing claimant recovers the amount found due for labor and materials, to be paid by the contractor and surety. The surety’s total liability is capped at the face amount of the bond, which is 100% of the construction contract amount (§ 44A-29).

If the combined total of all claims and previously paid amounts exceeds the bond face amount, the surety may seek to reduce any judgment accordingly. On large projects with many unpaid claimants, the bond cap can become binding. File early and pursue your claim promptly.

Attorneys’ Fees

§ 44A-35 gives the court or arbitrator discretion to award reasonable attorneys’ fees to the prevailing party in any suit under Article 2 or Article 3 of Chapter 44A. Fees are taxed as part of court costs with the final judgment or arbitration award.

The prevailing party is the party whose monetary position at the start of trial is closest to the final judgment amount (§ 44A-35(f)). The court may consider (§ 44A-35(d)):

• The amount in controversy and the results obtained
• The time and labor expended by counsel
• The novelty and difficulty of the issues
• The relative economic circumstances of the parties
• Whether a party unjustly exercised superior economic bargaining power or withheld undisputed amounts

Settlement leverage matters here. If a party serves an offer of judgment under Rule 68, or a written settlement offer, at least 30 days before trial, that offer is treated as the party’s monetary position for the prevailing-party determination (§ 44A-35(c)). A well-calibrated early offer can shift who recovers fees if trial goes close to the offered amount.

Non-waivable Protections

The protections under Article 3 cannot be contracted away (§ 44A-30(a)). No act or agreement between the contracting body, the contractor, or the surety can shorten the notice period under § 44A-27(b), reduce the time to bring suit under § 44A-28(b), or otherwise limit contractor or surety liability under the Article.

Beyond that, every bond given under this Article is conclusively presumed to have been given in compliance with the Article, whether or not the bond’s text conforms to it (§ 44A-30(b)). The statute is written into every qualifying bond by operation of law.

If the bond language attempts to narrow claimant rights or shorten deadlines, those terms are overridden. If the bond was obtained after an award on a covered project, it is a bond under this Article regardless of what it says.

Common Mistakes

• Never requesting the contractor’s project statement. You need the surety’s name and the contractor’s designated agent for service. If you’re served with a dispute and have never seen the project statement, you’re already behind.
• Treating the 120-day notice window as the target, not the limit. Every day you delay past day 75 costs you recoverable work. Serve the Notice of Public Subcontract as soon as payment becomes uncertain, not when the clock is nearly out.
• Serving notice late and not requesting the bond. Serving notice on day 100 cuts off 25 days of your claim, unless the contractor failed to provide the bond when you asked. Make the bond request in writing and preserve the response (or non-response).
• Assuming the 1-year deadline starts on your last day on site. It may start from final settlement with the contractor, which can be significantly later. Check when the contracting body officially closes out the prime contract.
• Filing suit before 90 days have elapsed. A premature filing is a defective filing. Wait out the 90-day period after last furnishing before commencing your action.
• Confusing the performance bond with the payment bond. The performance bond runs to the contracting body, not to you. Only the payment bond gives you a direct cause of action.
• Assuming sub-tier claimants have no rights. There is no tier cutoff under Article 3. Fourth-tier subs and remote material suppliers all have bond rights; the notice obligation just has to be met.