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

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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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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.

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Eviction Attorney in Wilmington, NC

Eviction Attorney in Wilmington NCIn the state of North Carolina, landlords wishing to evict tenants must use what is known as the “summary ejectment process.” Evicting individuals and/or families from either commercial or residential leased property is something that is taken very seriously in the Old North State. In fact, the court system tends to rule in favor of the tenants, more often than not, especially in cases of residential rentals.

In order for a magistrate to issue an eviction notice, the landlord must provide proof that all of the requirements for the summary ejectment statute have been followed, such as proper notice to the tenant. These matters are handled in small claims court and require valid reasons for the eviction. Examples of justification are:

  • The tenant(s) have been found guilty of engaging in criminal activity
  • The rent is past due and the responsible party has been given a 10-day extension in which to pay the amount in full
  • The lease has expired and the renter(s) refuse to leave the property
  • Some requirement of the signed lease has been not been met, for which eviction is the agreed upon consequence

After the decision to follow through with the eviction process is made, the landlord next files what’s known as a “Complaint in Summary Ejectment.” For cases in which rent in the amount of $5,000 or less is past due, the landlord can seek reimbursement in small claims court.

The tenant is notified about the complaint through the sheriff’s office. If money is owed, the tenant will be served with court papers in person. Otherwise, the official eviction notice is posted on the rental property premises. A hearing conducted in a court of law by a magistrate is the next step. At that time, it will be determined if the landlord will be able to regain possession of the property.

When it is discovered that the landlord is entitled to evict the tenant(s), the renter(s) will have 10 days to file an appeal in district court. The magistrate will determine how much of the past-due rent the tenant(s) must pay, which will then be posted as bond. The ongoing responsibility of rent must also be taken care of. When an appeal fails to take place, the clerk of the court may then issue a Writ of Possession so the sheriff can legally evict the tenant.

So, if you are having problems with a renter, avoid the temptation to just change the locks! To resolve these matters, the proper procedure must be followed.  Attorney Wes Scott Jones is experienced in these matters and will be happy to discuss your situation. Please call Wes to schedule an appointment for a free consultation at 910-256-5800.

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Commercial Landlord Legal Representation

Commercial Landlord Legal RepresentationAs a commercial landlord in the state of North Carolina, you may not be aware that trying to handle issues on your own can potentially make matters worse. For example, accepting late payments from commercial tenants can possibly lead to a loss of your rights to terminate the lease or take possession of the property.

In matters of commercial rentals, it is recommended to use the advice of an experienced business attorney, especially when you’re faced with landlord-tenant disputes.

If you are leasing commercial property, having Wilmington attorney Wesley Scott Jones on your team can help prevent a number of headaches later on down the road. As a skilled litigator, business and construction lawyer with extensive experience in commercial real estate matters, Wes is also well-versed in matters pertaining to creating and reviewing contracts, serving as a consultant during disputes, the eviction process, and, should it become necessary, court cases. Over the years, Wes has successfully assisted local businesses including retailers, restaurants, offices, and other commercial establishments resolve matters including:

  • Overdue rent
  • Property damage
  • Breach of lease
  • Illegal activity on premises
  • Evictions

In these matters, it’s always best to try and resolve problems before they become a bigger problem. To learn more about your rights and responsibilities as a commercial landlord, please call our office at 910-256-5800 or email us in order to schedule a free consultation with Attorney Wes Jones.

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Adding a DBA to an S-Corporation or LLC

Adding A DBA to an SCorp or LLCAs a business grows and evolves, it may become apparent that operating under a different name, or re-branding, may be beneficial. In that case, choosing a DBA may be the way to go.

To review, DBA stands for “doing business as.” In some states, this may be referred to as operating under a “trade name” or “assumed name.” Many business, and especially franchises, are set up this way.

S-corporations are taxed like partnerships and share the benefits of incorporation. The IRS limits the number of shareholders in this type of company to 100 or less. Next, consider Limited Liability Companies or LLCs. When set up under the proper guidelines, an LLC can be taxed like a partnership, which is an advantage.

If a business owner decides to add a DBA to an S-Corp or LLC, there are definite legal guidelines. Please note they vary slightly from state to state. That’s why it’s important to choose a qualified, licensed and experienced business attorney, such as Wesley Scott Jones, for such matters. Here’s a look at the steps involved:

  • A meeting with all of the shareholders and board of directors must be held. In order for the inclusion of the DBA to be approved, a majority must support the action. It is essential that the proceedings of this meeting are recorded in the minutes of the company’s official log.
  • Make sure that the selected DBA name does not conflict with another registered corporate name in your state or a federally registered name or trademark. This query involves checking with the U.S. Patent and Trademark Office and your secretary of state. Check their individual websites, for instructions on how to conduct these searches free of charge.
  • Because each state has different laws in the way DBAs are added, it is necessary to contact the Secretary of State where your company is registered. Either the Secretary of State’s office or the State Corporations Division office can guide you through the steps and required paperwork that must be completed before a DBA can be added to an S-Corp or LLC.
  • Next, new bank accounts must be established to avoid any confusion. The new accounts will need to include information about the full name of the S-Corp or LLC, plus details on the DBA name.
  • Finally, the name change must be filed with the IRS. Please note:
    • ***On the Form 1120-S income tax return, check the “Name Change” box in Section 1, Line H-this is where you will write the new full name of the business. The original DBA name will be listed on the form’s “Name” line.

Your “employer id numbers,” or EIN will not change, because you are not forming a new business, just being added to an existing one.

If you have further questions or would like to discuss the pros and cons of adding your DBA company to an S-Corp or LLC, contact Wes Jones. To contact our directly, call 910-256-5800.

Learn more about our practice and the other types of cases we handle by visiting our wsjlaw.com.

The office is located in Lumina Station, just before the Wrightsville Beach drawbridge. The address is 1904 Eastwood Avenue, Suite 30.

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Expert Legal Counsel Can Help Protect Your Small Business

Protect Your Small Business with Legal CounselIf you ask a successful business owner which two outside professionals are indispensable to the operation, the likely answer will be “my accountant and my attorney.”  Why an accountant is beneficial to a small business is pretty straightforward. They can handle the ongoing financial aspects of doing business such as deciphering complicated tax forms, reviewing sales figures, managing expenses, and charting accounts.

When it comes to legal counsel, many small business owners hesitate to retain an attorney after the initial work is complete for the business start up. They typically feel that it is just not necessary to keep in touch with an attorney until there’s a problem. The hole in that approach is that retaining legal counsel can prevent problems from cropping up. Consider it this way: consulting an experienced local business attorney like Wes Jones is equal to the proverbial “ounce of prevention that’s worth a pound of cure.”

Here’s an example of how having legal counsel available comes in handy before problems arise. Attorney Jones can look over your standard contracts or new employee interview questionnaire and bring light to potential situations that could arise. For instance, you may not be aware of certain laws pertaining to anti-discrimination and innocently ask the wrong questions that could justify a lawsuit and big headaches!

Situations like that are why having a consultation arrangement with an attorney, such as Wes Jones is so vital for providing legal review and guidance. Other times when having an attorney on your team is a plus includes:

  • Forming a corporation – Although it is quite possible to file articles of incorporation without lawyers, the administrative side of managing the complex tax and legal requirements often requires the services of a corporate attorney. Also keep in mind that it may be simple enough to form a legal business entity such as an LLC or business partnership without legal help, however, forming a corporation with shareholders and a board is a more complex process.
  • Litigation – This can include dealing with lawsuits by current or former employees or customers, breach of contract matters, debt collection, discrimination or harassment lawsuits, environmental lawsuits, government investigations for legal violations, and a variety of other types of disputes.
  • Buying or Selling a Business – Attorney Jones has years of experience with negotiating sales agreements, lease agreements, and more.

To learn more about how Wes Jones can assist in your business operations, please schedule a consultation by calling 910-256-5800.