Construction is one of the most important industries in North Carolina. According to data from the Associated General Contractors of America (AGC), construction contributes approximately $25.6 billion to the state’s gross domestic product (GDP) each year. It is also a highly competitive, commercially complex, and fast-moving industry.
Disputes can arise for a wide range of different reasons. At Anderson Jones, PLLC, we have extensive experience representing parties at all levels of contracting, including owners, contractors, subcontractors, and suppliers, across a broad range of legal disputes. Here, our construction litigation attorneys explain the key things to know about navigating the complex world of construction litigation in North Carolina.
Background: Industry Regulated By North Carolina Licensing Board for General Contractors
As a starting point, it is useful to know that the North Carolina Licensing Board for General Contractors regulates the construction industry in the state. The board is responsible for issuing and enforcing licenses for general contractors, as well as enforcing compliance with many applicable state laws and regulations. It also provides oversight and disciplinary actions when necessary.
Contracts Govern Most Commercial Relationships in Construction
While North Carolina law provides certain protections for construction companies and contractors, most commercial relationships in the state’s construction industry are governed primarily by written agreements (contracts). Along with other things, these contracts:
- Define the scope of work to be performed
- Clarify the payment terms
- Outline the rights and responsibilities of each party involved
- Provide other key details about the project
It is essential for all parties to fully understand the terms of the contract before signing it, as it will be legally binding and enforceable in court. If a construction dispute ends up in litigation, the matter will be resolved, in large part, in accordance with the terms of the contract.
Payment for Labor and Materials and Construction Litigation in North Carolina
Often, the core issue in dispute in construction litigation is payment. There may be an outstanding question about how much money is owed or if any money is owed at all. Although construction contracts play a massive role in governing these types of disputes, it is vital for all parties to understand that North Carolina has specialized laws in place to ensure that construction companies and contractors are paid for labor and materials that go towards improving real property.
Under Article 2 of Chapter 44A of the North Carolina General Statutes, a contractor who has not been paid has the right to file for a mechanic’s lien. Also sometimes called a construction lien, a mechanic’s lien is effectively a security interest in real property. It is one of the most powerful debt collection tools available to any party providing an improvement to real property in North Carolina. That being said, there are strict procedures that must be followed to obtain a construction lien.
Unpaid contractors must take action before the relevant statute of limitations expires. North Carolina law is clear: a construction lien must be filed within 120 days of the last date that labor or materials were provided. The lien will only be valid if it is filed with the clerk of court in the county where the property is located. And the lien claimant must file a lawsuit to enforce the lien within 180 days from the last date that labor or materials were provided. Finally, the North Carolina General Statutes provide protections to owners and contractors if they take certain additional steps. For instance, the owner or contractor may file and post a Notice of Contract which will cut off lower-tier subcontractors’ lien rights if they do not serve a corresponding Notice of Subcontract.
Alternative Dispute Resolution (ADR) May Be a More Cost Effective Option
Alternative Dispute Resolution (ADR) can be a more cost-effective option for resolving construction disputes in North Carolina compared to traditional litigation. ADR refers to a variety of methods for resolving disputes outside of the courtroom, such as mediation and arbitration. These methods can be faster and less expensive than going to trial and can often result in a more satisfactory resolution for both parties. While not the right solution in every case, it is best to consider ADR in light of the facts and circumstances of each particular construction dispute.
If you have any specific questions about mediation, arbitration, or ADR, more generally, our North Carolina construction dispute lawyers and mediators are here to help.
Contact Our Raleigh Construction Litigation Lawyer for Immediate Help
At Anderson Jones, PLLC, our North Carolina construction litigation attorneys have the professional experience and legal expertise that you can rely on. If you are currently locked in a challenging construction dispute, we are here to help. Contact us today to arrange a fully confidential, no-commitment case review. From our law office in Raleigh, we provide construction litigation services throughout North Carolina and Georgia.