Category: Construction

Did you know we are licensed in Florida and Alabama, too?

4/13/2023

By Associate Attorney Danielle Nodar

You may know that Jesson & Rains, PLLC offers a variety of legal services including estate planning, probate administration, business law and litigation, and construction contracts and litigation. But you may not know that they are also licensed in other states as well.

Kelly Jesson, Edward Jesson, and Danielle Nodar are licensed to practice law in both North Carolina and Florida. Katheryn Currie is licensed to practice law in both North Carolina and Alabama. Hopefully, Ed and Katheryn will be licensed in South Carolina by the end of the year!

By maintaining our licensure and good standing in multiple states, we are able to provide legal services to our clients that may reside in North Carolina but have businesses or real estate located in another state. For example, if you own real estate in Florida and need to retitle it, our attorneys can draft and record your Florida real estate deed. As our practice has become more virtual over the last few years, we are also able to assist our clients who reside out-of-state with drafting documents that must be from the client’s resident state, such as wills and powers of attorneys.

If you have questions about how we can assist you with your legal needs in or outside of North Carolina, Florida, or Alabama, please let us know!

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It’s Going to Take How Long?! Delays in Construction Projects

3/30/2023

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By Attorney Edward Jesson

Delays in construction are often unavoidable. This rang especially true over the last few years while the world has been dealing with the COVID-19 pandemic. Contractors have had to deal with material shortages, price increases, and difficulty finding labor, among many other issues. However, legal issues tend to arise when those delays start costing people involved in the project money.

The first thing to look at when evaluating whether you may have a claim for delay damages is the construction contract. Most contracts address delays, though the level of specificity will vary greatly. Generally speaking, the parties will be bound to whatever the contract says with regards to delay damages. Assuming that delay damages are recoverable, the burden is on the party claiming those damages to show: (1) what caused the delay; (2) that the person or entity claiming the damages was in no way responsible for the delay; and, (3) that the damages requested were, in fact, caused by the delay.

Under North Carolina law, delay damages can, for the most part, be quite easily categorized. For example, there are excusable and non excusable delays. Generally, excusable delays will be delays caused by circumstances outside of the contractor’s control—COVID-19 being a great example. An example of a non excusable delay is failure to properly schedule and coordinate the work. In most instances, parties will not be able to make a claim for excusable delays and may be able to make a claim for non-excusable delays.

There are also compensable and non compensable delays. A compensable delay would be a delay caused by circumstances within the control of the owner but not the contractor making the delay claim. For example, failure of the owner to provide materials which were required to be purchased by the owner which causes a delay in construction could be considered compensable delay—one that would entitle the contractor to additional time to complete the project or, under certain circumstances, monetary damages. Non compensable delays are, under most circumstances, going to be delays that do not allow anyone claim for monetary damages.

Of course, in order to make a claim for monetary damages from a delay you have to show that you have suffered actual financial damages. Examples of monetary delay damages could be an owner’s lost profits from not being able to open a business on time, or increased material costs due to a delay from the contractor. Examples of monetary damages for a contractor may include the costs of idle equipment and labor, extended project overhead, and potentially lost profits from jobs that the contractor could not take due to delays caused by the project owner.

There are many other aspects to delay damages under North Carolina law—many of which can be costly to owners and contractors alike. The good news is that many of these risks can be mitigated using effective contractual language. If you are curious whether your business is protected or if you have a delay issue, don’t hesitate to give the attorneys at Jesson & Rains a call.

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Recent changes to NC’s lien statutes - what does it mean for you?

3/25/2022

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By Attorney Edward Jesson

In January of this year, the North Carolina legislature passed some significant changes to North Carolina’s mechanics lien laws that went into effect on March 1, 2022. The main changes to the law make void and unenforceable contractual provisions requiring lien waivers as a condition for progress payments, modify the attorneys’ fee provisions contained in the lien statutes, and affect the design-build contracting process.

Chapter 22B of the North Carolina General Statutes, titled “Contracts Against Public Policy,” has been amended to include a new Section 22B-5, which provides that requiring someone to submit a waiver or release of lien as a condition to receiving progress payments under a construction agreement or design professional agreement are void and unenforceable unless limited to the progress payments actually received in exchange for the lien waiver. In other words, broad blanket lien waivers in exchange for progress payments are now unenforceable unless the lien waiver is specifically drafted and narrow enough in scope to only apply to the money actually being received by the party applying for payment.

The attorneys’ fee section of the mechanics lien statutes has been updated to specify the method that the court or arbitrator must use to determine which party is the “prevailing party” in circumstances where attorneys’ fees may be at issue. Instead of the Plaintiff in a lawsuit having to obtain a judgment of at least 50% of the amount it claimed, which was the case prior to March 1, the court or arbitrator will look to the party whose monetary position at the beginning of the trial is closest to the amount of the final judgment or arbitration award. The new statute also specifically allows the court or arbitrator to look at several factors, including the economic circumstances of the parties or whether one party unreasonably exercised its superior bargaining power (e.g., a very wealthy general contractor working with a relatively small subcontractor). This process, while a big change to the existing law, should have the effect of giving much more certainty when evaluating whether the court or arbitrator is likely to grant attorney’s fees when it comes time to try a case.

The changes to the design-build process only appear, at this time, to affect the design-build process as it applies to State funded projects. The changes include adding statutory definitions for “design builder,” “design professional,” “first-tier subcontractor,” “licensed contractor,” “licensed subcontractor,” “unlicensed subcontractor,” “costs of the subcontractor work,” “general conditions,” and “key personnel.” The changes also now require design builders responding to requests for proposals from the government to select their project team by one of two methods that are outlined in the new law. Furthermore, the law makes some changes specific to the bidding process for publicly funded bridging contracts and makes it clear that the requests for proposals public notice provisions require the owner to provide a list of general conditions for which the design builder needs to provide a fixed fee in its response to the proposal. This is not an exhaustive list of the changes that have been made, but given the nature and number of changes to the public design-build process, it is important to carefully review these new requirements prior to bidding on publicly funded design build projects.

These new laws will have a significant impact on many contracts used in North Carolina, litigation over attorneys’ fees in lien claims, and those design-builders engaged in the public bidding process. Should you require assistance with any of these changes, please do not hesitate to call Jesson & Rains.

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Can You “Lease” A General Contractor’s License?

1/27/2022

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By Attorney Edward Jesson

In North Carolina, the Licensing Board for General Contractors controls who can apply for and hold a general contractor’s license and what the criteria is for those seeking to obtain a license. In general, in North Carolina, if you are wanting to bid on or perform construction projects with a value in excess of $30,000.00, you must obtain a general contractor’s license. Of course, if you are involved in plumbing, electrical, or HVAC work (or various other trades), you must obtain a license from the relevant board controlling those trades.

We have frequently been asked if a company or individual who doesn’t own a general contractor’s license can simply “lease” or “borrow” a license from someone who does hold a general contractor’s license. The answer is “no.”

The definition of a general contractor in North Carolina is “any person or firm or corporation” who plans on performing work in excess of $30,000.00. In order to hold a general contractor’s license, among other things, the license holder has to pass a test. A “firm or corporation” is not able to sit down and take a test—a person must. Therefore, this is where “qualifiers” come into play. In North Carolina, a business applicant must identify in its application a person who has successfully passed the exam (or who plans to take the exam) who will act as a qualifier for the business. A qualifier must be a responsible managing employee, officer, or member of the personnel of the business applying. A responsible managing employee is a person who is working for the applicant business for a minimum of 20 hours per week or a majority of the hours operated by the business. If the person is not an owner, officer, or partner, the person must be a W2 employee. Similarly, a member of the personnel refers to a W2 employee. Therefore, the qualifier cannot be an independent contractor and cannot be “leased” or “borrowed.”

Under these circumstances, for example, XYZ Building, Inc. would be the named license holder but “Mr. Jones” would be the qualifier—the individual who had actually passed the Board’s exam. If that qualifying individual is no longer employed or associated with the company, the company’s license will remain in effect for 90 days in order for the company to make arrangements to get another qualifier in place. However, and very importantly, during that 90 day period, the license holder company cannot bid on or obtain any more work until its license is fully reinstated.

Not just anyone can act as a qualifier for a company. Moreover, simply hiring someone who holds a general contractor’s license does not mean that the company is properly licensed with the Board. XYZ Building, Inc. would have to submit an application to the Board that lists Mr. Jones as its qualifier, and Mr. Jones would have to fit the criteria to actually be a qualifier. Without going through the proper steps, XYZ Building, Inc. may be guilty of the “unauthorized practice of contracting,” which is a class 2 misdemeanor in North Carolina. Additionally, XYZ Building, Inc. may not have any recourse against a homeowner who fails to pay them because they were not properly licensed.

If you need assistance complying with the North Carolina Licensing Board for General Contractor’s rules or have already received notice from the Board that you are in violation of its rules, the attorneys at Jesson & Rains may be able to help.

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“GC’ing” Your Own House Flip? Not So Fast…

12/2/2021

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By Attorney Edward Jesson

With the rise in popularity of “HGTV” and “DIY Network,” and with people looking to make additional income in the real estate market, we have seen a rise in the number of people wanting to “flip” their own homes. However, in North Carolina, there are important considerations when undertaking any construction project, especially when you are “flipping” a home.

Generally, under North Carolina law, a General Contractor is any person or corporation who bids on or contracts to perform construction work where the overall cost of the project is going to be greater than $30,000.00. If you want to perform work for another person, and the cost of that work is over $30,000.00, you’ll typically need a general contractor’s license. Importantly, for work totaling less than $30,000.00, you don’t need a license. This is why handyman services, etc. do not need to necessarily be licensed with the state.

However, there is an exception to the rule requiring a license for any work performed over $30,000.00—after all, YouTube tutorials are a thing! In North Carolina, you can act as your own General Contractor so long as you own the building or land at the time the work is being done and so long as the building is intended solely for occupancy by that person and his family. North Carolina presumes that if the property is sold within 12 months following completion of the work, the person did not intend the building to be solely for their occupancy.

What does this mean for budding HGTV stars? If the “flip” you are doing is going to cost more than $30,000.00 and you intend to sell the home once the home is complete, you need to get a general contractor’s license prior to beginning work or hire a general contractor to oversee the work instead of yourself.

It is important to note that you still need to pull the relevant permits, obtain the necessary inspections, and have work such as electrical, plumbing, and HVAC performed by properly licensed individuals, regardless of whether or not you need or have a General Contractor’s license.

Should you have any questions about the process or need additional help, please don’t hesitate to call Jesson & Rains today.

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Who is Entitled to a Mechanic’s Lien Under North Carolina Law?

12/3/2020

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By Attorney Edward Jesson

Most people in the construction industry are at least partially familiar with the Mechanic’s Lien statutes in North Carolina. For those that are not familiar with them, you can always get a refresher from our previous article, “Construction Liens 101”. While most people understand that a general contractor, or sub-contractor, or a sub sub-contractor (and so on) may generally be entitled to at least some sort of lien on property if they are not paid, most people are surprised to learn that contractors aren’t the only ones entitled to a lien.

The applicable North Carolina statute states that:

Any person who performs or furnishes labor or professional design or surveying services or furnishes material or furnishes rental equipment pursuant to a contract, either express or implied, with the owner or real property for the making of an improvement thereon shall, upon complying with the processions of this Article, have a right to file a claim of lien on real property . . . .

As you can see, the definition of persons who can claim a mechanic’s lien is broad and is not just limited to those actually performing construction work. Those who provide materials (e.g. concrete suppliers, lumber suppliers) are entitled to mechanic’s liens if they do not receive payment. Likewise, those who provide rental equipment can file mechanic’s liens if they do not receive payment. This can be especially troubling for a general contractor, as often, the material suppliers and rental equipment businesses are several rungs down the contractual ladder from the general contractor or owner.

Similarly, those who provide professional design or surveying services are entitled to a mechanic’s lien if they don’t receive payment. North Carolina law provides that design services encompasses both architects and engineers.

Of course, not everyone involved in a construction project is entitled to a direct lien on the real property: only those who have a contract with the owner of the real property are entitled to a direct lien (subject to limited exceptions). Those further down the contractual chain are generally only going to be entitled to a subrogated lien (again, subject to certain exceptions).

It is incredibly important when involved in any construction project, whether you’re on the owner’s side or the construction/design side, to make sure that everyone down the chain is getting paid for the work that they are performing. Even if a supplier of a sub-sub-contractor doesn’t get paid, that can cause costly legal issues should they seek to file a lien at a later date. The attorneys at Jesson & Rains can assist if liens are filed and protect against liens being filed in the first place. Please give us a call if you need assistance!

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