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).

RESIDENTIAL CONSTRUCTION CLAIMS IN NORTH CAROLINA

Attorney for General Contractor, Wilmington NC

Residential Construction Claims come about within a variety of contexts depending upon who you are in the process:

1. Homeowners:

Common claims that existing or potential Homeowners can have include claims against the General Contractor, a Design Professional (Architects, Engineers, Landscape Architects, Surveyors, etc.), a Subcontractor, a Material Supplier or a Real Estate Agent, among others.

  • Claims against the General Contractor include:  Breach of Contract, Delayed Performance, Breach of Express Warranties, Breach of Implied Warranties, Breach of Warranty of Workmanlike Performance, Breach of Warranty of Habitability, Negligence, Negligent Construction, Negligent Supervision, Negligent Inspection of the Work, Negligent Selection of Materials, Misrepresentation, Fraud, Unfair and Deceptive Trade Practices, and Failure to Be Properly Licensed.
  • Claims against a Subcontractor or Material Supplier include:  Negligence, Breach of Implied Warranty of Merchantability and Negligent Selection of Materials.
  • Claims against a Real Estate Agent include:  Breach of Contract, Breach of Fiduciary Duty, Breach of Duty of Loyalty and Obedience, Breach of Duty of Skill, Care and Diligence, Failure to Disclose Material Facts, Improper Accounting of Funds, Negligence, Fraud, and Unfair and Deceptive Trade Practices.

2. Builders and Contractors:

Common claims that Builders and Contractors can have include claims against the Homeowner, a Design Professional, a Subcontractor, or a Material Supplier, among others.

  • Claims against the Homeowner include:  Breach of Contract, Failure to Pay, and Interference with Performance of Contract.
  • Claims against a Design Professional include:  Breach of Contract, Breach of Warranty of Plans and Specifications, Negligent Preparation of Plans and Specifications, Negligent Supervision, and Negligent Inspection.
  • Claims against a Subcontractor or Material Supplier include:  Breach of Contract, Breach of Implied Warranty of Merchantability, Negligence, and Negligent Selection of Materials.

3. Subcontractors and Material Suppliers:

Common claims that Subcontractors and Material Suppliers can have include claims against the Homeowner, claims against the Builder/Contractor, and claims against each other.

  • Claims against the Homeowner include:  Failure to Pay, Claim of Lien On Funds, Claim of Lien On Real Property, and Signing a False Lien Waiver.
  • Claims against the Builder/Contractor include:  Breach of Contract, Failure to Pay, Claim of Lien On Funds, Claim of Lien On Real Property, and Signing a False Lien Waiver.
  • Claims against each other include:  Breach of Contract, Failure to Pay, Claim of Lien On Funds, Negligent Selection of Materials, and Product Liability.

If you anticipate or are experiencing a Construction Law Dispute with respect to the construction or sale of a Residential Home, call an experienced construction attorney for advice and help.  Call Wesley Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Construction and 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).

Construction Laws May Vary by State

Construction Law ServicesWilmington attorney, Wes Jones appreciates that managing a construction project is a tall order. Hiring subcontractors, securing surveyors and inspectors, purchasing materials and acquiring all the necessary permits for a building job are just the beginning. Dealing with weather, illness, and scheduling glitches present their own set of challenges.

When builders agree to work across state lines, which they often do, they may be surprised to learn that construction regulations can vary greatly. In fact, there may be a number of legal issues of which they are completely unaware. Because the legal aspects involved with both commercial and residential construction can differ from state to state, securing the services of an attorney familiar with those laws is strongly advised.

Builders that accept projects in North Carolina are often shocked to discover that individuals with very minimal ties to the job can sue them. For example, if the construction firm caused any delays, loss of profits, or was found negligent, someone outside of the “contractual privity” category is able to sue. Although many states make contractual privity a requirement, which serves to define the relationship and accountability between the parties in a construction contract, North Carolina does not in some cases. Other matters that are not the same among all 50 states are statutes of limitations and statutes of repose. These define how long a builder can be found responsible and be held accountable for damage or injuries suffered on, through, or by the construction site.

Even if you are familiar with the current laws on the books that govern construction practices, having an experienced attorney will help you stay one step ahead, especially when changes are made or new laws are enacted. For example, here along the Cape Fear coast, many were caught off guard with the new flood insurance legislation and how it impacts both new construction and renovation projects.

To avoid any surprises and for optimum piece of mind, it just makes sense to get the facts from an experienced attorney who is familiar with the legal requirements of the state you’ll be working in. Throughout southeastern NC and the greater Wilmington area, Wes Jones has a proven track record in Construction Law and Litigation.

If you want to be confident that you are in full compliance with the law, please schedule a meeting with Wesley Scott Jones. You can also learn more about his practice and the other types of cases he handles by browsing his Practice Areas and Services.

Wes’s office is located in Lumina Station, just before the Wrightsville Beach drawbridge, at 1904 Eastwood Avenue, Suite 30. To make an appointment or get more information on the services Attorney Wes Jones provides, please call 910-256-5800.

Proper File Management in Your Construction Firm

Construction FilingIn today’s world of hi-tech communication, some may think the concepts of establishing a “paper trail” and “getting it in writing” are almost obsolete. Some construction professionals assume it’s enough to have a well-executed contract and rely on text messages and e-mails to communicate with clients, vendors, inspectors, and subcontractors during a building project. Regardless of the job, there should always be a solid documentation process that is well understood and executed to the letter by you and all of your employees.

For the uninitiated, grasping the amount of paperwork involved for a building project, even a simple one-can be mind-boggling. From the job’s initial proposal to the final walk-through, the number of documents and forms is sizeable. Consider a few of these items that must be accounted for, especially if there are ever any legal issues that arise, before, during, or even after the work is complete: proposals, estimates, supply receipts, surveys, inspections, pay stubs, building plans, and all correspondence among all of the parties involved in the endeavor. Communications that rely on digital media and e-mails must also be accounted for.

When a business owner understands what is known in legal terms as the “discovery process,” he or she can then appreciate why thorough documentation of every step is vital. Of course no one ever expects to face legal trouble. However, in the construction industry, there are just too many factors at play to take any chances. To set things up for smooth sailing, there are just a few necessary procedures to follow. The idea of such in-depth record keeping may seem over the top at first, however, if and when a lawsuit rears its ugly head, you’ll be glad the system was in place.

In the act of discovery, information is obtained using all means and methods. This fact-finding is an integral part of prosecuting or defending a lawsuit. Questions are posed by the plaintiff’s legal team, and with the assistance of your attorney, the answers are provided. This will require the production of any or all documents that pertain to any or all phases of the project. It is important to understand that in the discovery period, items may be requested that do not even seem relevant to the case, however, you will be responsible for making them available. A few examples of typical requested articles are:

  • Hand written notes, personal or business calendars, and e-mails
  • Communications in any form sent by one of your employees to anyone involved in the job, from the client to the subcontractors. Even if the individuals had a friendship or causal acquaintanceship, their transmissions may be viewed as admissible in a court of law.
  • Meeting minutes

For the sake of discovery, all documents, including notes jotted down on post-in notes or scrap paper and personal journals can be requested.

To cover all your bases, a system for recording all aspects of the project must be in place.

Creating a system such as this is just as important as developing your contractual documents and is another example of why retaining legal counsel is essential for success. It’s a preventive measure that equates to wearing a seat belt, bike helmet, or installing smoke alarms. Protect yourself with an ironclad document filing system!

Here are the steps to consider:

  • Familiarize each employee with the proper procedures for acquiring and filing all paperwork, including e-mails. Ensure that everyone is using the same system for filing whether it’s for paper records or e-mail folders. Also stress that keeping detailed, chronological information is the only way to do it. Encourage everyone to ask if they are ever unsure about the company’s record-keeping system.
  • Stress the importance of establishing detailed and clear contracts and proposals. The procedure should follow a logical progression and if one step is skipped, such as unclear points that go unanswered or failure to sign a document, then the process stops until the issue is resolved. Consistency and accountability are the keys to success.
  • Know your employees and monitor any inappropriate behavior such as posts on social media sites. Also, insist that they enter all work related items into the company’s computer system rather than keeping it on their personal computer, even if the computer was provided by the firm.
  • Keep a special, separate file marked “Problems” or “Unresolved Issues”. If any one, including a client, supplier, subcontractor, employee or inspector voices concern or displeasure during any phase of the work-document it. Having access to such details could be vital if the issue escalates and winds up in a legal dispute.
  • When matters from the “Problem File” result in further action being taken, move the paperwork regarding those activities to another special folder labeled, “Legal”. This information should also be kept separate from the other files and ideally in a different location to prevent inadvertent disclosure.
  • Finally, explain to all employees that when creating e-mails, letters, faxes, social site posts, or even phone conversations, that the “Grandmother Rules” should be followed. That is, mind your manners, follow the Golden Rule, when in doubt-don’t, and treat everyone with respect.

If you would like to discuss ways to mange your construction firm’s files and important papers, Wilmington attorney Wesley Scott Jones is just a phone call away. Wes has represented numerous construction and home building  professionals in the greater Wilmington area, including architects, developers, contractors, and subcontractors. His office is located in beautiful Lumina Station across from Landfall just before the Wrightsville Beach bridge in Wilmington, NC. Please, call today for a free consultation – 910-256-5800.

New Hanover County Construction Litigation

Construction BlueprintsThis has been a busy year for home builders and subcontractors in New Hanover County and the surrounding area. In fact, compared to this time last year, construction activity is up between 4 and 5 percent.  There are scores of new residential developments going up, both in the single-family and multi-family markets. Current homeowners are also enlisting the help of home improvement professionals to update and upgrade their properties.

In the multi-faceted process of home construction, whether the task at hand is new construction, renovation, or an addition, sometimes things just don’t go according to plan. As a local attorney for contractors in Wilmington, Wesley Scott Jones understands all too well the variety of difficulties that can crop up during construction projects. You may have had excellent communication and an ironclad contract, but unforeseen issues can cause major financial headaches plus major inconveniences.

Here are just a few examples of problems that can arise:

  • faulty construction
  • improper permitting
  • work delays
  • bid protests
  • labor issues
  • failure to meet local codes and/or OSHA requirements
  • construction defects that can lead to safety and health problems such as leaks and mold
  • HOA disputes

Wes has represented numerous building professionals in the greater Wilmington area, including architects, developers, contractors, and subcontractors. If you have concerns that could require an experienced, knowledgeable litigator, please contact our office.

We are located in beautiful Lumina Station across from Landfall just before the Wrightsville Beach bridge in Wilmington, NC. There is easily accessible, free parking. Call us today for a free consultation: 910-256-5800.

Defective Workmanship or Design

Construction BlueprintsAs builders in New Hanover County continue to see increased activity on the construction front, those in the industry can also expect to see more potential lawsuits alleging defective design and workmanship. Local attorney, Wes Jones is skilled in addressing this area of construction claim. Since 1994, Wes has represented Wilmington, NC clients in the construction and real estate business, including architects, developers, designers, general contractors, subcontractors, and material manufacturers.

In considering counsel by Attorney Jones, consider that he has extensive experience in working with insurers, multiple parties, individual homeowners, and community associations. Wes has handled numerous cases involving a variety of complex construction and design issues such as, infrastructure problems, defective building materials, water damage as a result of alleged construction or design defects, and mold concerns.

“If something can go wrong it probably will.”  With all of the steps and complex components required for even the most simple projects, it does seem that the aforementioned “Murphy’s Law” was written especially for those involved in the phases of construction and design. Of course no one in the business ever sets out to become the subject of a defective workmanship controversy. However, piece of mind is knowing that should you find yourself in such a situation, Attorney Wes Jones can help. Should problems arise, Jones urges any parties involved to first try and resolve the situation amicably on their own. If that does not work, dispute resolutions of this type are one of his specialties.

Upon choosing Wes for your dispute, he will evaluate your case and consider any and all viable strategies for resolving the matter to your satisfaction. Wes also works with HVAC installers, brick masons, electricians, and plumbers.  Learn more about his experience with Construction Law in Wilmington, NC.

If you would like to learn more, please contact the office of Wesley Scott Jones910-256-5800

 

Litigation Lawyer for Construction Firms in Wilmington, NC

Business man The Wall Street Journal reported in November that home building is on the rise. According to the article, the Dow Jones U.S. Home Construction Index rose around 80% over 2012. As the housing market continues to improve, the uptick in new construction is expected to continue. There was even more encouraging news in a press release from Harvard’s Joint Center for Housing Studies. It was announced in the fall that, “annual homeowner improvement spending is expected to reach double-digit growth in the first half of 2013.”

Although this is all certainly good news, anyone involved in the business of construction knows there is a great deal involved in building or remodeling a home. As building activity picks up in the Wilmington area, those in the housing industry will want to safeguard their interests and protect themselves from possible disputes that could arise. As a Construction Law Litigator, Attorney Wesley Scott Jones is available to assist clients with a variety of scenarios that builders, contractors, design professionals, suppliers, and owners are often challenged with. In addition to residential cases, Wes is also able to take on cases relating to commercial and government projects.

Due to the detailed nature of construction, remodeling, and home building, it is a good idea to retain legal counsel as a preventative measure. Attorney Jones can guide you through the initial stages of contract preparation so you’ll begin each project on the right foot. Since there are also typical pitfalls that can besiege even the most simple construction project, Wes uses his experience and offers attention to detail on tasks like investigating and negotiating issues such as disruption claims, negligence, and defective workmanship. Wes tackles these cases by evaluating each aspect of the project. Regardless of how large or small the task at hand is, it typically involves these basic topics:

  • The range of work that the parties involved agreed to
  • The documents set forth that explain the project and work it will entail
  • How the contractor, designer, or supplier will be reimbursed
  • How the owner will be guaranteed that the builders are doing their work properly and to code
  • How any problems with the above-mentioned areas be handled

When you contract the services of Attorney Wesley Jones, his role will be to help you plot a course of action so there will be smooth sailing and no surprises. Learn more here: wsjlaw.com/practice-areas-and-services/construction-law-litigation/. To contact the office of Wesley Scott Jones directly, simply call 919-256-5800.

 

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