North Carolina Construction Indemnity Law Update

It has long been a policy in North Carolina to prohibit indemnity agreements in construction contracts which allowed one party to require another party to indemnify the first for its own negligence.  The General Assembly recently passed HB 871, adding language to N.C.G.S. § 22B-1 and expanding that policy to contracts with design professionals, like architects, engineers, and surveyors. Now, indemnity agreements in both construction agreements and design professional agreements are only enforceable where the promisor (the party indemnifying) is the proximate cause of the loss, damage, or expense being indemnified. The new bill also makes unenforceable provisions in a “construction agreement that includes design professional services or a design professional agreement” requiring a design professional to defend the other party for damages or expenses, including attorney’s fees, for negligence in whole or in part of the design professional. Now design professionals are no longer on the hook to pay attorney’s fees for litigation brought against project owners, even if the suit is based on negligence of the design professional.

Regardless of the type of contract (construction agreement or design professional agreement), indemnity provisions which allow or require one party to indemnify any other party for the sole negligence of the first, are always enforceable.

The new law went into effect on August 1, 2019 and applies to all contracts entered into, amended, or renewed on or after that date.

With attorneys licensed in North Carolina, South Carolina and Georgia, Anderson Jones can help you and your business navigate this law or any other construction-related legal issue. Contact our legal team at (919) 277-2541 or by email for more information.