COMMERCIAL CONSTRUCTION IN NORTH CAROLINA: Late Payments to Subcontractors – is it legal?

On Commercial Construction Projects, North Carolina law provides Protect Your Small Business with Legal Counselthat a General Contractor cannot withhold payment to its Subcontractors just because the General Contractor has not been paid by the Owner of the project. Specifically,  N.C.G.S. §22C-2. Performance by Subcontractor states:

“Performance by a subcontractor in accordance with the provisions of its contract shall entitle it to payment from the party with whom it contracts. Payment by the owner to a contractor is not a condition precedent for payment to a subcontractor and payment by a contractor to a subcontractor is not a condition precedent for payment to any other subcontractor, and an agreement to the contrary is unenforceable.”

As the statute says, even if the written Contract provides such a “pay when paid” clause, the provision is unenforceable by the General Contractor as a matter of North Carolina public policy.

Moreover, any payment due to a Subcontractor from a General Contractor, or from a Subcontractor to its subcontractor, must be paid withing seven (7) days of receipt of the subcontractor’s invoice for work performed. N.C.G.S. § 22C-3.  Time of Payment to Subcontractors states:

“When a subcontractor has performed in accordance with the provisions of his contract, the contractor shall pay to his subcontractor and each subcontractor shall pay to his subcontractor, within seven days of receipt by the contractor or subcontractor of each periodic or final payment, the full amount received for such subcontractor’s work and materials based on work completed or service provided under the subcontract.”

Additionally, any late payments bear interest at the rate of 1% per month or 12% per year.  N.C.G.S.  § 22C-5.  Late Payments to Bear Interest states:

“Should any periodic or final payment to a subcontractor be delayed by more than seven days after receipt of periodic or final payment by the contractor or subcontractor, the contractor or subcontractor shall pay his subcontractor interest, beginning on the eighth day, at the rate of one percent (1%) per month or a fraction thereof on such unpaid balance as may be due.”

However, these rules do not require a General Contractor or Subcontractor to pay its subcontractors, as set forth above, if the subcontractor’s work is deficient in any way.  N.C.G.S.  § 22C-4.  Conditions of Payment states:.

“Nothing in this Chapter shall prevent the contractor, at the time of application and certification to the owner, from withholding such application and certification to the owner for payment to the subcontractor for: unsatisfactory job progress; defective construction not remedied; disputed work; third party claims filed or reasonable evidence that claim will be filed; failure of subcontractor to make timely payments for labor, equipment, and materials; damage to contractor or another subcontractor; reasonable evidence that subcontract cannot be completed for the unpaid balance of the subcontract sum; or a reasonable amount for retainage not to exceed the initial percentage retained by the owner.”

Finally, be aware that these provisions apply to Commercial Construction Projects only; not to Residential Construction Projects.  N.C.G.S. § 22C-6.  Applicability of this Chapter states:

“The provisions of this Chapter shall not be applicable to residential contractors …, or to improvements to real property intended for residential purposes …., or to improvements to real property intended for residential purposes which consist of 12 or fewer residential units.”

If you are a Subcontractor working on a Commercial Construction Project in North Carolina, and you have trouble getting payment for work you performed on the project, call Wesley S. Jones now for a free phone consultation.

Wesley Jones is a Construction and Business Lawyer in Wilmington, North Carolina serving all of Southeastern North Carolina including New Hanover County (including Wilmington, Kure Beach, Wrightsville Beach, Carolina Beach and the areas of Ogden, Masonboro, Myrtle Grove, Landfall, and Mayfair), all of Pender County (including Burgaw, Surf City, Hampstead and Topsail Beach) and all of Brunswick County (including Bald Head Island, Bolivia, Calabash, Leland, Shallotte, Southport, Saint James, Ocean Isle, and Oak Island).

Business Litigation Matters

Business Litigation MattersWhen Wilmington attorney Wesley Scott Jones takes on a case, his goal is to handle the matter swiftly and effectively.  As a business and lawyer and litigator, Wesley appreciates that his clients want to get back to business, not spend their valuable time in a courtroom. Over the years, attorney Jones has represented both plaintiffs and defendants from large and small businesses, including family-owned businesses, Corporations, Limited Liability Companies, Sole Proprietors, and Franchises, both big and small in District Court, Superior Court, Federal Court and in Mediation.  Learn more about Business Litigation Services from Wesley Jones.

Whether the business owner is a new or experienced professional, the wide variety of issues that can escalate into a legal dispute is truly amazing.  That is why it makes sense to retain the services of a skilled litigator, just in case.  In recent years, Attorney Jones has represented clients throughout the courtrooms of southeastern North Carolina, in matters such as:

  • Account Collection
  • Breach of Contract
  • Breach of Corporate Duty
  • Business Judgment Rule
  • Contract Disputes
  • Collection of Past Due Accounts
  • Deceptive Trade Practices
  • Deceptive Business Practices
  • Debt Collection
  • Delinquent Accounts
  • False Statements
  • Franchisor-Franchisee Disputes
  • Fraud
  • Interference with Contracts or Business Relations
  • Judgment Recovery
  • Misappropriation of Trade Secrets
  • Misrepresentation
  • Negligent Misrepresentation
  • Nonpayment
  • Ownership Disputes
  • Partnership Disputes
  • Payment Disputes
  • Piercing the Corporate Veil
  • Torts
  • Unfair and Deceptive Trade Practices
  • Unfinished Work
  • Undelivered Goods

Most everyone going into a business or construction deal is usually hopeful and excited about the anticipated end result.  Ensure smooth sailing for your business and gain piece of mind with a little help from the Law Office of Wesley Scott Jones.  To learn more about the services his firm provides, please call lawyer Wesley Jones today at 910-256-5800 for a free consultation.

Wesley Jones is a Litigation Lawyer serving all of Southeastern North Carolina including  New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Carolina Beach and the areas of Ogden, Masonboro, Myrtle Grove, Landfall, and Mayfair), all of Pender County (e.g. Burgaw, Surf City, Hampstead and Topsail Beach) and all of Brunswick County (e.g. Bald Head Island, Bolivia, Calabash, Leland, Shallotte, Southport, Saint James, Ocean Isle, and Oak Island).

Breach of Contract

ContractAlong with the goods and services a business provides to its customers, its success and reputation are also built on the strength of its contracts. In business, agreements can be verbal or in writing. Regardless of their format, each type should be honored.

When one or more of the parties involved does not honor a contractual binding agreement or arranged exchange, a breach of contract occurs. This also applies to situations when one party’s performance is met with interference or one party indicates to the other that the agreed-upon promise will not be fulfilled. One’s behavior and conduct can also be an indicator of their inability or unwillingness to honor the established agreement. Legal action may be the next step.

In breach of contract cases, Attorney Wesley Scott Jones believes investigating all of the mitigating circumstances involved in the dispute is key in arriving to a positive outcome for his clients. Based on his direct experience with contract law, Wes knows that simply denying wrongdoing is not enough. Jones is also keenly aware as a defense attorney who represents those in the construction and real estate industry, that taking quick action is vital in the development of a strong argument.

With questions concerning contractual dealings, there are an infinite number of situational factors that can come into play. A few typical examples are:

  • The contract contains terms that are unclear.
  • The agreement was supposed to have been in writing but all or portions of it, are not.
  • There are clerical errors in the contract that can impact its validity and outcome.
  • One party was coerced into signing the agreement, under circumstances such as intimidation or false information.
  • In order to fulfill the contract, illegal activity would have to occur.

In matters that concern business, construction, or real estate in the greater Wilmington area, Wes Jones has demonstrated extensive experience. If you are in danger of being charged with breach of contract, please call the office of Wesley Scott Jones at 910-256-5600.

Learn more about his practice and the other types of cases he handles here: wsjlaw.com/practice-areas-and-services

The office is located in Lumina Station, just before the Wrightsville Beach drawbridge. The address is 1904 Eastwood Avenue, Suite 30. To make an appointment or get more information on the services Attorney Wes Jones provides, please contact Wes Jones today.