What NC contractors need to do about the new lien and bond laws


Guest Editorial by Brian J. Schoolman,  Safran Law Offices, Raleigh:

January 1, 2013, is the effective date for the key provisions of House Bill 1052, which revised North Carolina’s lien and public bond statutes.  After that date, several critical changes take effect:

— On private projects, the most significant changes affect Section 44A-23, the statute for subcontractor lien rights.  For projects permitted or starting after January 1, a first-tier subcontractor may use the dates of first and last furnishing of the general contractor for computing priority, as well as the deadline to file and perfect the claim of lien.  This may strengthen a sub’s position with respect to priority over other claimants, and may extend the time before which the sub must file its lien claim and/or its complaint to perfect.  Another change affects all subs and suppliers.  Previously, Section 44A-23 required a sub to give notice of a claim of lien upon funds as a precondition to claiming a lien on real property by subrogation.  Under the new statute, the claim of lien on real property may be filed without including (or even having served) the notice of claim on funds.

— On public projects, the changed laws will protect general contractors from some “double payment” liability, and impose a new notice requirement on lower tier subs making payment bond claims.  Any sub or supplier who is not in direct contract with the GC will be required to deliver a Notice of Public Subcontract, listing the sub’s name and address, a description of the project, a description of the contract, and a description of the labor and materials to be furnished.  Failure to deliver the Notice will limit the sub’s bond claim to only those labor or materials furnished 75 days prior to the claim, and/or up to a maximum of $20,000.

In order to benefit from the double payment protection, general contractors will be obligated to deliver a project statement to all of their subs, and those subs must flow down the statement to their subs, and so on.  The project statement identifies the name of the project, the physical location, the name of the contracting body, the name of the contractor, the contact information for the contractor’s agent (who will receive requests for the bond, notices, and claims), and the contact information for the payment bond surety.  Any party – the GC or a sub – who does not deliver the project statement to a lower tier party will be unable to enforce the contract agreement against the lower tier until after delivery of the statement.

For more information about these and the other lien law revisions, please go to the Safran Law Offices website at www.safranlaw.com, and click on the “Resources” tab.



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