The Carolinas AGC reports a committee of the state House on June 13 approved proposed legislation that would help solve problems with contractors having to pay twice for the same work or materials as well as bankruptcy issues that threaten subcontractors. House Bill 1052 was approved with amendments in House Judiciary Subcommittee B and sent to the full House for consideration this week.
The action came with amendments that were offered by aggregates representatives. Under the original bill, lower-tiered subcontractors and suppliers would only be able to recover against a payment bond for labor and materials provided within to 60 days prior to having notified the contractor in writing that they were providing labor materials on the job. The aggregates representatives offered an amendment that would extend that look-back period to 75 days. The original bill only would apply to jobs of $10,000 or more. The aggregates representatives offered an amendment raising that ceiling to $25,000.
Dave Simpson, NC government relations and building director for Carolinas AGC, told committee members that the 60-day threshold was adequate, noting that South Carolina has no such time period and that most states with related laws only have 20-30 day look-back periods, with only two having a 60-day look-back period. Simpson also urged the committee to reduce the threshold from the proposed $25,000 to $20,000, noting that building contractors have lost millions of dollars in having to pay twice for the same materials. At the same time, Simpson said, Carolinas AGC, because of the fragile nature of the compromise legislation, did not want to do anything that would jeopardize the bill at a time when the NC General Assembly is winding down its short session.
The Judiciary Subcommittee B voted to reduce the proposed threshold from $25,000 to $20,000 but to keep the look-back period to 75 days. Concerning bankruptcy issues, the proposal would clarify that lower-tiered subcontractors would have the same ability as contractors to recover on lien claims once a higher-tiered party files for bankruptcy.
Meantime, CAGC will continue to be heavily involved with ongoing efforts concerning hidden-lien problems that title insurer and banking interests are trying to resolve through proposed legislation that would set up a lien agent notice requirement to perfect a claim of lien on real property. Under this process, contractors, subcontractors and suppliers would all have to notify an independent lien agent of their work on a project in order to make sure their lien claims took priority over a subsequent buyer’s interest. The lien agent process would apply to any project larger than $30,000. Please contact members of the state House and the Senate Judiciary I Committee to ask them to support House Bill 1052.