Huge Win for Contractors as Double Payment Legislation Passes in North Carolina

RALEIGH, N.C., July 5, 2012 /PRNewswire-USNewswire/ -- North Carolina's construction industry scored a major victory last week when the N.C. General Assembly approved legislation that will save contractors millions of dollars by helping to solve double payment problems where contractors unfairly have had to pay twice for the same work or materials. The legislation, which also includes CAGC-supported relief to subcontractors involving bankruptcy issues, takes effect January 1, 2013. Passage of the bill, led on the Senate and House floors by Sen. Pete Brunstetter (R-Forsyth) and Rep. Sarah Stevens (R-Surry), was a top priority for Carolinas AGC in chipping away at the issue over the last twenty-plus years.

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"This has been an issue I have heard about from my father since I was a young child," said Carolinas AGC member Susie Lewis of Beam Construction. "It took a long time, but I am glad it is coming to pass in my lifetime."

Under House Bill 1052 (Mechanics Liens/Payment Bond Reforms), a big problem will be solved for building contractors when the furnishing of labor or materials by a subcontractor or supplier costs more than $20,000. The issue involves a general contractor paying a subcontractor, who in turn, for example, does not pay the supplier. The supplier could then file a payment bond claim against the general contractor— leaving the general contractor having to pay twice. The new legislation also will help subcontractors and suppliers by allowing them to continue to pursue lien claims even if a contractor up the chain files for bankruptcy.

Also included in HB 1052 is a provision that requires a contractor, upon written request from a subcontractor or supplier, to provide information on the contractor's payment bond. In addition, the legislation requires a contractor to provide a project statement to all its subcontractors and suppliers. The project statement will include necessary information for a payment bond claimant to provide its pre-notice. The contractor's subcontractors then have the obligation to pass this project statement to their respective subcontractors and suppliers. The basic idea is that it will become industry custom for subcontractors and suppliers to ask for and receive this project statement before they begin work.

Carolinas AGC led efforts in putting together a coalition of CAGC members, including construction attorneys, and others, to help pass HB 1052. In stakeholder meetings involving lawmakers, Scott Bengel of Shelco and Susie Lewis testified as to why the double payment process was hurting building contractors, with Bengel saying his company alone lost hundreds of thousands of dollars in the past few years. Ricky Vick of S.T. Wooten also provided invaluable input concerning HB 1052 and related legislation to try to ensure fairness to the entire construction industry. CAGC next year will continue to seek improvements on the related legislation, Senate Bill 42, involving so-called hidden liens. The message CAGC members and staff focused on is that HB 1052 will help ensure efficient payment up and down the construction chain.

Carolinas AGC thanks legislation co-sponsors Sen. Brunstetter and Rep. Stevens; the North Carolina Bar Association for initiating and shepherding this legislation; Kim Crouch, lobbyist for the NCBA; Keith Coltrain of Wall Templeton & Haldrup, P.A.; Katherine Wilkerson of Lynch & Eatman, LLP; Nan Hannah of Vann & Sheridan Attorneys at Law; Hank Jarrett of Conner Gwyn Schenck PLLC; and Matt Bouchard of Lewis & Roberts, PLLC.

Carolinas AGC represents contractors and construction-related firms in North Carolina and South Carolina, and serves as a chapter of AGC of America and ARTBA.

Through diverse partnerships, Carolinas AGC effectively innovates and shares knowledge across sectors and generations; advancing the construction industry to enhance the quality of life and deliver a sustainable difference in the Carolinas.

Visit us at www.cagc.org.

Contact: Dave Simpson, CAGC NC Government Relations and Building Director, 919/781-3270, ext. 5724.     

SOURCE Carolinas Associated General Contractors