Battle of the Forms: North Carolina Title Insurance Companies Modify Lien Forms but Confusion Still Widely Exists

Our office regularly fields questions from clients concerning construction contractors who insist upon the execution of forms drafted and published by North Carolina title insurance companies:  http://www.nclta.org/forms.  Lower tier parties (suppliers and subcontractors) regularly balked at indemnification language provided for in prior lien waiver and subordination agreement forms.  The title companies recently responded to the backlash by removing the indemnification language in favor of less restrictive reliance language.

The indemnification language changes have eased tensions somewhat.  Nonetheless, a fundamental issue still exists in the industry concerning the difference between a lien waiver and subordination agreement.  Lien waivers release lien rights.  Subordination agreements typically modify the priority of liens which have been or may be filed in the future.  We regularly see situations where a party is incorrectly insisting upon execution of a subordination agreement, where a lien waiver is appropriate.  In an effort to ease this widespread confusion, we hope that Black’s Law Dictionary definitions may help:

Lien waiver definition: http://thelawdictionary.org/lien-waiver/

Subordination agreement definition:  http://thelawdictionary.org/subordination-agreement/