North Carolina’s Mechanics’ Lien and Bond Laws – Part 3
This article by Attorney Lee Peindl is one of a series of articles that focuses on legislation affecting North Carolina’s Mechanics’ Lien and Bond Laws. It is adapted from Attorney Lee Peindl’s seminar on Lien Law changes.
Curtailment of Double-Payment Risks on State Projects—Effective January 1, 2013
(N.C. Gen Stat §44A-27)
Effective January 1, 2013, a new scheme is being introduced for North Carolina’s public projects that will provide contractors with some protection against double payment. The new scheme requires contractors to furnish any claimant with a copy of the payment bond within seven (7) days of the claimant’s written request.
It requires contractors to provide all of their subcontractors and suppliers with a “Project Statement.” Additionally, the new provision requires subcontractors to provide all of their subcontractors and suppliers with the contractor’s Project Statement, as well. A contractor or subcontractor that fails or refuses to provide a Project Statement cannot enforce its contract against the lower tier party until the Project Statement has been provided to the lower tier party.
The Project Statement must contain:
(1) the name of the project;
(2) the physical address of the project;
(3) the name of the contracting body;
(4) the name of the contractor;
(5) the name, phone number, and mailing address of an agent authorized by the contractor to accept service of requests for the payment bond, the notice of public subcontract, and the notice of claim on payment bond; and
(6) the name and address of the principal place of business of the payment bond surety.
Subcontractors’ New Notice Requirements
Upon receipt of a Project Statement, subcontractors and suppliers should serve “Notice of Public Subcontract” upon the contractor. If Notice of Public Subcontract is sent within seventy-five (75) days of the subcontractor’s or supplier’s first date of furnishing labor or materials, then the subcontractor or supplier can pursue its full claim. Otherwise, the subcontractor’s or supplier’s claim will be limited to the greater of (i) the value of the labor or materials provided within seventy-five (75) days of claim or (ii) $20,000.00, unless the contractor has failed to timely furnish a copy of the payment bond to the claimant.
We will examine this topic in further detail in upcoming blog posts.
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