Construction Law in North Carolina

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The economic boom continues and, with it, legal challenges caused by labor shortages

North Carolina Construction News staff writer

This year’s story about trends in North Carolina’s construction law is an extension and amplification of last year’s news – stresses resulting from a high volume of work have caused labor shortages, project delay challenges and quality control issues.

“The major issue is the increase in work,” says David Carson, the chair of the North Carolina Bar Association’s Construction Law Section (NCBA-CLS). “And the impact of the labor shortage has been made more clear and magnified by the increase in the number of projects.”

The NCBA-CLS represents about 615 construction lawyers throughout the state. Many practice construction law full time, although several lawyers, especially in smaller areas, combine construction law with other specialties.

Although construction lawyers don’t generally practice immigration law, Carson acknowledged that the Donald Trump administration’s crack down on undocumented immigrants has likely added to construction labor market stresses.

There are other problems, however. The shortage of skilled labor means that work quality suffers, resulting in potentially serious construction defects – which may haunt the industry (and provide much work to the legal profession) in future years.

“Many multi-family projects are being produced and constructed in such a fast fashion, so quickly,” Carson said. “The speed at which these projects are being built, and the manpower and labor shortage and the lack of skilled tradespeople – all that plays into the risk of work being performed that is sub-par.”

“I fully expect that these facts will result in increased numbers of insurance defense type cases in the future.”

Meanwhile, in the short-term, the higher work volume has resulted in the discovery of “holes in the construction lien law, which last received a major revision in 2012.”

NCBA-CLS members work collegially on these issues, suggesting and reviewing legislative revisions. As they sort out immediate issues, they are contemplating the next major statute revision, projected to be in 2018/2019.

He says construction industry business leaders should prepare for changes in the industry’s typical cyclical environment.

It may be necessary to budget to pay more for qualified workers and subcontractors, because in a labor shortage environment, the cost of project delays may be greater than in having a lack of tradespeople to do the work.

For the lawyers, times are good in good times, and can be even busier when the market changes and the construction economy heads into one of its periodic slumps.

“Construction lawyers have been busy” in the current booming economy, Carson said. “The high level of activity in the construction industry is not a negative event if you are a construction lawyer.”

However, he said the lawyers may be busier “when the economy starts turning down.”

“On many projects, that is when the real increase in (legal) work happens” as suppliers and contractors struggle to be paid; and construction defect claims for projects built during the labor-shortage times become apparent.

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