The Law Office of Wesley Scott Jones, P.C.

Wesley Jones

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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).

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FORMING A CORPORATION IN NORTH CAROLINA


Stock CertificateForming a Corporation to start or operate a business in North Carolina can be beneficial to the business owners in two important ways:  1) it can help prevent the business owner from paying too much in federal and state income taxes and 2) it can help protect the business owners from incurring Personal Liability for acts carried out by the business.

So what are the main steps in forming a North Carolina Corporation?

  • You must select a Business Name and make sure that name is available for use in North Carolina.
  • You must file proper and complete Articles of Incorporation with the North Carolina Secretary of State.
  • Before filing the Articles of Incorporation, you must determine the number of shares the corporation will be authorized to issue (Issued Shares), the class of shares to be issued, who will serve as the Registered Agent, what will be the Registered Agent Address, and who will serve as the Incorporator.
  • After the Articles of Incorporation have been filed, must must hold an Organizational Meeting.
  • At the Organizational Meeting, you must elect Directors, appoint Officers, adopt a set of Bylaws, adopt a Corporate Seal, and issue Stock Certificates to the business owners (called Shareholders).
  • Before operating the business, you will want to apply for a Federal Identification Number (EIN Number) and State Identification Number for banking and tax purposes.
  • If you qualify and wish to be treated as an S-Corporation for tax purposes, you must complete and file IRS Form 2553.
  • Other Considerations:  Should you file an Assumed Name Certificate?  Do you need a Privilege License to operate your business?  Do the business owners need a Shareholders Agreement?  When should you file your first Annual Report with the North Carolina Secretary of State’s office?  What Corporate Formalities should I follow to keep my corporation valid as a legal entity?

If you are planning to form a North Carolina Corporation, the foregoing topics are just a few that a business owner must successfully navigate through to begin operating a business.  If you need help or advice, call an experienced Business Attorney.  Call Wesley Scott Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Lawyer serving in Wilmington, North Carolina 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).

The following are just a few of the Business Services that Wesley Scott Jones provides to clients:  Forming new Corporations and Limited Liability Companies, drafting Articles of Incorporation, Articles of Organization, Shareholders Agreements, Organizational Minutes, Operating Agreements, Annual Meeting Minutes, Bylaws, Annual Reports, Assignments, Board of Director’s Meeting Minutes, Business Entity Startup and Formation, Representing clients who are Buying or Selling a Business, Business Dissolution and Liquidation, Contract Review and Drafting (including Non-Compete or Noncompetition Agreements, Confidentiality Agreements, and Nondisclosure Agreements), Due Diligence Research, Leases, Licensing, Non-Profit Corporations, Non-Solicitation Agreements, Professional Malpractice, Promissory Notes, and Regulatory Compliance.

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ASSET PURCHASE AGREEMENTS: Closing Considerations in North Carolina

Depending upon the type of Business Assets involved, the following are just a few of the documents that a potential Buyer and Seller may want to include in an Asset Purchase Agreement at Closing:

  • The Parties will need a Bill of Sale and Assignment of Property.
  • The Buyer should determine if it needs to form a new Business Entity with which to buy the Seller’s assets.
  • The Buyer should consider whether it wants or need a Noncompetion Agreement with the Seller and/or the Seller’s Shareholders/Members, and/or Key Employees.
  • If Intellectual Property is involved, the parties will need an Assignment of Trademarks, Patents, and/or Copyrights, as applicable.
  • If the Seller’s website domain, email addresses, and/or telephone numbers are involved, the parties will need an Assignment Agreement to cover these items.
  • The parties will need an Assignment of Contracts, Leases, and/or Liabilities as applicable.
  • If the Buyer wants the Seller’s owners and/or Key Employees to assist Buyer with Buyer’s new business for a period of time after Closing, the Buyer will need an Employment/Consulting Agreement with these parties.
  • If the Buyer is not paying cash at Closing, the Seller will at a minimum want a Promissory Note signed by the Buyer, and a Seller should consider whether additional security is needed in the form of a Personal Guarantee Agreement signed by the Buyer’s individual Owners, a Security Agreement on transferred personal property, or a Deed of Trust on transferred Real Property.
  • The Buyer will want appropriate Approvals by the Seller’s Stockholders/Members and Board or Directors/Members.
  • The Seller will want appropriate Approvals by the Buyer’s Stockholders/Members and Board of Directors/Members.

If you are planning to Purchase the Assets of an existing business, the foregoing documents are just a few that a potential Buyer and Seller may want to include in an Asset Purchase Agreement.  If you need help or advice, call an experienced Business Attorney. Call Wesley Scott Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Lawyer serving in Wilmington, North Carolina 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).

The following are just a few of the Business Services that Wesley Scott Jones provides to clients:   Annual Meeting Minutes, Annual Reports, Assignments, Board of Director’s Meeting Minutes, Business Entity Startup and Formation, Buying or Selling a Business, and Business Dissolution and Liquidation, Bylaws, Contract Review and Drafting (including Non-Compete or Noncompetition Agreements, Confidentiality Agreements, and Nondisclosure Agreements), Due Diligence Research, Drafting Shareholder and Operating Agreements, Drafting Shareholders and Directors Meeting Minutes,  Leases, Licensing, Limited Liability Company Formation, LLCs, Meeting Minutes, Non-Profit Corporations, Non-Solicitation Agreements, Organizational Minutes, Partnership Formation, Professional Malpractice, Promissory Notes, Regulations,  Shareholder Agreements, Shareholder’s Meeting Minutes, and Starting and Operating a Franchisee Business.

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ASSET PURCHASE AGREEMENTS: Pre-Closing Considerations in North Carolina

Depending upon the type of business assets that you want to purchase, the following are just a few of the things that a potential Buyer should consider:

  • Do you need a Nondisclosure Agreement with the Seller?
  • Is there an existing Broker/Finder Agreement that affects the transaction?
  • Have you determined all of the Related Parties on which due diligence should be performed (Seller, Stockholders/Members, Subsidiaries, or other Affiliated Entities)?
  • What is the Lien Status of the property to be conveyed?
  • Can the Seller produce a Certificate of Good Standing from the Secretary of State?
  • Are there any Third Party Consents required by Contracts with third parties that are to be assigned by Seller and assumed by Buyer?
  • Have you reviewed the Seller’s Financial Information?

If you are planning to Purchase the Assets of an existing business, these are just a few of the considerations that must be thought through and preferably verified prior to Closing on an Asset Purchase transaction in North Carolina. If you need help, call an experienced Business Attorney for advice and help. Call Wesley Jones now at 910-256-5800 for a free telephone consultation.

Wesley Jones is a Business Lawyer serving in Wilmington, North Carolina 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).

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OPERATING A FRANCHISE BUSINESS IN NORTH CAROLINA

Operating a Franchise Business in WilmingtonOperating a franchise business is a great way to operate a business provided you begin the process properly and stay compliant with all relevant laws.  A franchise business typically comes with a set framework for how the business will be conducted, products or services offered, pricing, and special promotions.  Franchisors also give franchisees very specific guidelines for everything from advertising to how services or products are offered to the public. For many, running a franchise business is ideal – they are provided with a business formula with a proven track record of success.

As an attorney for numerous business owners in and around the Wilmington area, Wesley Scott Jones knows that it can potentially be easier and less stressful to operate a franchise as opposed to a solo enterprise.  Another plus is the fact that around the country, franchises seem to have a higher survival rate compared to other similar ventures.  Having the financial backing and name recognition of an established business certainly doesn’t hurt.

However, starting and operating a franchise business can be daunting, complicated and unnerving.  One of the problems that can arise is the iron-clad nature of the contracts that large franchisors want franchisees to sign.  What should be the proper term for the contract – 5, 10, 20 years?  What kind of Security Agreements, if any, should you be willing to sign in favor of the franchisee?  Do you fully understand all of the terms and conditions of the Franchise Agreement and will you be able to comply with all them?  Should you operate the new business as a sole proprietorship or under a new Business Entity?  That’s why anyone considering a franchise business should discuss his or her plans with a business law professional, like Wesley Jones.

Wesley Jones also has experience with taking a business from private ownership to franchise, including consulting on and drawing up Contracts and all legal paperwork involved in the transaction.

To schedule an appointment with attorney Jones, please give his office a call at 910-256-5800.   Initial phone consultations are free.  Call now!

The office is located in Lumina Station, just before the Wrightsville Beach drawbridge. The address is 1904 Eastwood Road, Suite 301.  Parking is free parking! 

Wesley Jones is a Business Law Attorney serving all of Southeastern North Carolina including  New Hanover County (e.g. Wilmington, Kure Beach, Wrightsville Beach, Carolina Beach, Landfall and Mayfaire), all of Pender County (e.g. Burgaw and Topsail Beach) and all of Brunswick County (e.g. Bolivia, Southport, Ocean Isle, and Oak Island).

Related Post:

STARTING AND OWNING A FRANCHISEE BUSINESS IN WILMINGTON

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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).