§ 44A-4. Enforcement of lien by sale. - North Carolina Statutes

§ 44A-4.  Enforcement of lienby sale.

(a)        Enforcement bySale. – If the charges for which the lien is claimed under this Article remainunpaid or unsatisfied for 30 days or, in the case of towing and storage chargeson a motor vehicle, 10 days following the maturity of the obligation to pay anysuch charges, the lienor may enforce the lien by public or private sale asprovided in this section. The lienor may bring an action on the debt in anycourt of competent jurisdiction at any time following maturity of theobligation. Failure of the lienor to bring such action within a 180-day periodfollowing the commencement of storage shall constitute a waiver of any right tocollect storage charges which accrue after such period. Provided that whenproperty is placed in storage pursuant to an express contract of storage, thelien shall continue and the lienor may bring an action to collect storagecharges and enforce his lien at any time within 120 days following default onthe obligation to pay storage charges.

The owner or person with whomthe lienor dealt may at any time following the maturity of the obligation bringan action in any court of competent jurisdiction as by law provided. If in anysuch action the owner or other party requests immediate possession of theproperty and pays the amount of the lien asserted into the clerk of the courtin which such action is pending, the clerk shall issue an order to the lienorto relinquish possession of the property to the owner or other party. Therequest for immediate possession may be made in the complaint, which shall alsoset forth the amount of the asserted lien and the portion thereof which is notin dispute, if any. If within three days after service of the summons andcomplaint, as the number of days is computed in G.S. 1A-1, Rule 6, the lienordoes not file a contrary statement of the amount of the lien at the time of thefiling of the complaint, the amount set forth in the complaint shall be deemedto be the amount of the asserted lien. The clerk may at any time disburse tothe lienor that portion of the cash bond, which the plaintiff says in hiscomplaint is not in dispute, upon application of the lienor. The magistrate orjudge shall direct appropriate disbursement of the disputed or undisbursedportion of the bond in the judgment of the court. In the event an action by theowner pursuant to this section is heard in district or superior court, thesubstantially prevailing party in such court may be awarded a reasonableattorney's fee in the discretion of the judge.

(b)        Notice andHearings. –

(1)        If the property uponwhich the lien is claimed is a motor vehicle that is required to be registered,the lienor following the expiration of the relevant time period provided bysubsection (a) shall give notice to the Division of Motor Vehicles that a lienis asserted and sale is proposed and shall remit to the Division a fee of tendollars ($10.00). The Division of Motor Vehicles shall issue notice byregistered or certified mail, return receipt requested, to the person havinglegal title to the property, if reasonably ascertainable, to the person withwhom the lienor dealt if different, and to each secured party and other personclaiming an interest in the property who is actually known to the Division orwho can be reasonably ascertained. The notice shall state that a lien has beenasserted against specific property and shall identify the lienor, the date thatthe lien arose, the general nature of the services performed and materials usedor sold for which the lien is asserted, the amount of the lien, and that thelienor intends to sell the property in satisfaction of the lien. The noticeshall inform the recipient that the recipient has the right to a judicialhearing at which time a determination will be made as to the validity of thelien prior to a sale taking place. The notice shall further state that therecipient has a period of 10 days from the date of receipt in which to notifythe Division by registered or certified mail, return receipt requested, that ahearing is desired and that if the recipient wishes to contest the sale of hisproperty pursuant to such lien, the recipient should notify the Division that ahearing is desired. The notice shall state the required information insimplified terms and shall contain a form whereby the recipient may notify theDivision that a hearing is desired by the return of such form to the Division.The Division shall notify the lienor whether such notice is timely received bythe Division. In lieu of the notice by the lienor to the Division and thenotices issued by the Division described above, the lienor may issue notice ona form approved by the Division pursuant to the notice requirements above. Ifnotice is issued by the lienor, the recipient shall return the form requesting ahearing to the lienor, and not the Division, within 10 days from the date therecipient receives the notice if a judicial hearing is requested. If theregistered or certified mail notice has been returned as undeliverable and thenotice of a right to a judicial hearing has been given to the owner of themotor vehicle in accordance with G.S. 20-28.4, no further notice is required.Failure of the recipient to notify the Division or lienor, as specified in thenotice, within 10 days of the receipt of such notice that a hearing is desiredshall be deemed a waiver of the right to a hearing prior to the sale of theproperty against which the lien is asserted, and the lienor may proceed toenforce the lien by public or private sale as provided in this section and theDivision shall transfer title to the property pursuant to such sale. If theDivision or lienor, as specified in the notice, is notified within the 10-dayperiod provided above that a hearing is desired prior to sale, the lien may beenforced by sale as provided in this section and the Division will transfertitle only pursuant to the order of a court of competent jurisdiction.

Ifthe registered or certified mail notice has been returned as undeliverable, orif the name of the person having legal title to the vehicle cannot reasonablybe ascertained and the fair market value of the vehicle is less than eighthundred dollars ($800.00), the lienor may institute a special proceeding in thecounty where the vehicle is being held, for authorization to sell that vehicle.Market value shall be determined by the schedule of values adopted by theCommissioner under G.S. 105-187.3.

Insuch a proceeding a lienor may include more than one vehicle, but the proceedsof the sale of each shall be subject only to valid claims against that vehicle,and any excess proceeds of the sale shall be paid immediately to the Treasurerfor disposition pursuant to Chapter 116B of the General Statutes.

Theapplication to the clerk in such a special proceeding shall contain the noticeof sale information set out in subsection (f) hereof. If the application is inproper form the clerk shall enter an order authorizing the sale on a date notless than 14 days therefrom, and the lienor shall cause the application andorder to be sent immediately by first-class mail pursuant to G.S. 1A-1, Rule 5,to each person to whom notice was mailed pursuant to this subsection. Followingthe authorized sale the lienor shall file with the clerk a report in the formof an affidavit, stating that the lienor has complied with the public orprivate sale provisions of G.S. 44A-4, the name, address, and bid of the highbidder or person buying at a private sale, and a statement of the dispositionof the sale proceeds. The clerk then shall enter an order directing theDivision to transfer title accordingly.

Ifprior to the sale the owner or legal possessor contests the sale or lien in awriting filed with the clerk, the proceeding shall be handled in accordancewith G.S. 1-301.2.

(2)        If the property uponwhich the lien is claimed is other than a motor vehicle required to beregistered, the lienor following the expiration of the 30-day period providedby subsection (a) shall issue notice to the person having legal title to theproperty, if reasonably ascertainable, and to the person with whom the lienordealt if different by registered or certified mail, return receipt requested.Such notice shall state that a lien has been asserted against specific propertyand shall identify the lienor, the date that the lien arose, the general natureof the services performed and materials used or sold for which the lien isasserted, the amount of the lien, and that the lienor intends to sell theproperty in satisfaction of the lien. The notice shall inform the recipientthat the recipient has the right to a judicial hearing at which time adetermination will be made as to the validity of the lien prior to a saletaking place. The notice shall further state that the recipient has a period of10 days from the date of receipt in which to notify the lienor by registered orcertified mail, return receipt requested, that a hearing is desired and that ifthe recipient wishes to contest the sale of his property pursuant to such lien,the recipient should notify the lienor that a hearing is desired. The noticeshall state the required information in simplified terms and shall contain aform whereby the recipient may notify the lienor that a hearing is desired bythe return of such form to the lienor. Failure of the recipient to notify thelienor within 10 days of the receipt of such notice that a hearing is desiredshall be deemed a waiver of the right to a hearing prior to sale of theproperty against which the lien is asserted and the lienor may proceed toenforce the lien by public or private sale as provided in this section. If thelienor is notified within the 10-day period provided above that a hearing isdesired prior to sale, the lien may be enforced by sale as provided in thissection only pursuant to the order of a court of competent jurisdiction.

(c)        Private Sale. –Sale by private sale may be made in any manner that is commercially reasonable.If the property upon which the lien is claimed is a motor vehicle, the sale maynot be made until notice is given to the Commissioner of Motor Vehiclespursuant to G.S. 20-114(c). Not less than 30 days prior to the date of theproposed private sale, the lienor shall cause notice to be mailed, as providedin subsection (f) hereof, to the person having legal title to the property, ifreasonably ascertainable, to the person with whom the lienor dealt ifdifferent, and to each secured party or other person claiming an interest inthe property who is actually known to the lienor or can be reasonablyascertained. Notices provided pursuant to subsection (b) hereof shall besufficient for these purposes if such notices contain the information requiredby subsection (f) hereof. The lienor shall not purchase, directly orindirectly, the property at private sale and such a sale to the lienor shall bevoidable.

(d)        Request for PublicSale. – If an owner, the person with whom the lienor dealt, any secured party,or other person claiming an interest in the property notifies the lienor priorto the date upon or after which the sale by private sale is proposed to be made,that public sale is requested, sale by private sale shall not be made. Afterrequest for public sale is received, notice of public sale must be given as ifno notice of sale by private sale had been given.

(e)        Public Sale. –

(1)        Not less than 20 daysprior to sale by public sale the lienor:

a.         Shall notify theCommissioner of Motor Vehicles as provided in G.S. 20-114(c) if the propertyupon which the lien is claimed is a motor vehicle; and

a1.       Shall cause notice tobe mailed to the person having legal title to the property if reasonablyascertainable, to the person with whom the lienor dealt if different, and toeach secured party or other person claiming an interest in the property who isactually known to the lienor or can be reasonably ascertained, provided thatnotices provided pursuant to subsection (b) hereof shall be sufficient forthese purposes if such notices contain the information required by subsection(f) hereof; and

b.         Shall advertise thesale by posting a copy of the notice of sale at the courthouse door in thecounty where the sale is to be held;

andshall publish notice of sale once a week for two consecutive weeks in anewspaper of general circulation in the same county, the date of the lastpublication being not less than five days prior to the sale. The notice of saleneed not be published if the vehicle has a market value of less than threethousand five hundred dollars ($3,500), as determined by the schedule of valuesadopted by the Commissioner under G.S. 105-187.3.

(2)        A public sale mustbe held on a day other than Sunday and between the hours of 10:00 A.M. and 4:00P.M.:

a.         In any county whereany part of the contract giving rise to the lien was performed, or

b.         In the county wherethe obligation secured by the lien was contracted for.

(3)        A lienor maypurchase at public sale.

(f)         Notice of Sale. –The notice of sale shall include:

(1)        The name and addressof the lienor;

(2)        The name of theperson having legal title to the property if such person can be reasonablyascertained and the name of the person with whom the lienor dealt;

(3)        A description of theproperty;

(4)        The amount due forwhich the lien is claimed;

(5)        The place of thesale;

(6)        If a private salethe date upon or after which the sale is proposed to be made, or if a publicsale the date and hour when the sale is to be held.

(g)        Damages forNoncompliance. – If the lienor fails to comply substantially with any of theprovisions of this section, the lienor shall be liable to the person havinglegal title to the property or any other party injured by such noncompliance inthe sum of one hundred dollars ($100.00), together with a reasonable attorney'sfee as awarded by the court. Damages provided by this section shall be inaddition to actual damages to which any party is otherwise entitled.(1967, c. 1029, s. 1; 1975, c. 438, s. 1; c. 716, s. 5;1977, c. 74, s. 4; c. 793, s. 1; 1981, c. 690, s. 26; 1983, c. 44, ss. 1, 2;1985, c. 655, ss. 4, 5; 1989, c. 770, s. 10; 1991, c. 344, s. 1; c. 731, s. 3;1995 (Reg. Sess., 1996), c. 635, ss. 2-4; 1998-182, s. 15; 1999-216, s. 10;1999-460, s. 7; 2004-128, s. 5.)