Construction Law FAQs

Can I Recover Attorney’s Fees if I am Successful in Defending a Lien?
Under North Carolina law, the presiding judge has the discretion to award reasonable attorney’s fees in construction lien cases. If the Plaintiff obtains a judgment for at least 50% of the amount sought, or if a Defendant or Third Party Defendant faces a judgment for less than 50% of the claimed amount, attorney’s fees may be awarded. This 50% threshold can be modified by an offer of judgment made under Rule 68 of the North Carolina Rules of Civil Procedure. However, fees are not guaranteed; there must be a finding that the losing party unreasonably refused to fully resolve the matter before trial.

Can I Rely on My Lender’s Inspection in Making Payments?
No. Lender inspections are conducted to verify adequate progress on the project and to protect the lender’s interest in the construction loan. As a property owner, you should conduct your own inspections to ensure that the work complies with the contract and any draw schedules. Relying solely on lender inspections may expose you to potential problems.

Can I Terminate My Construction Contract if I am Unhappy with My Contractor?
Termination of a construction contract can occur if the contractor commits a material breach of the contract. However, the property owner must not be in breach themselves. It is advisable to provide notice of the breach and give the contractor a chance to cure the issue before terminating the contract. Your contract may also include specific provisions on how and when termination can occur. Always seek legal advice before terminating a contract, as this can have serious consequences.

Does a Construction Contract Have to Be in Writing?
No, a construction contract does not have to be in writing to be enforceable, but it is highly recommended. Oral contracts are valid, provided the basic elements of a contract (parties, consideration, description of work, price, etc.) are met. However, a written contract reduces the chances of disputes and provides clarity on terms and conditions, including how disputes will be handled.

Does a Standard Form Contract Adequately Protect Me?
Not necessarily. Standard contracts, such as those from the American Institute of Architects (AIA), are widely used but may not address specific terms relevant to your project. Often, these contracts reference other documents that may not be provided at the time of signing. It’s crucial to have a lawyer review and customize any contract to suit your specific needs.

How Do I Protect Myself Against Liens?
To protect yourself from construction liens, always request a lien waiver/affidavit from your contractor at the time of payment. This document should state that all subcontractors and suppliers have been paid in full. If you receive a lien notice from a subcontractor, consult an attorney immediately to determine your rights and avoid potential disputes.

Is a North Carolina General Contractor Required to Be Licensed?
Yes. In North Carolina, any contractor (individual, firm, or corporation) undertaking a construction project valued at $30,000 or more must be licensed by the North Carolina Licensing Board for General Contractors. A contractor’s failure to hold the appropriate license prevents them from enforcing the contract or collecting fees. It’s important to verify that the contractor is properly licensed before entering into any agreement.

What Costs Are Included in a Cost-Plus Contract?
The costs included in a cost-plus contract are determined by agreement between the parties. The contract should be in writing and clearly specify which costs are covered, such as materials, labor, overhead, and profit margins. Clarity in defining costs helps avoid disputes down the road.

What Is a Punch List?
A punch list is a list of minor tasks or corrections that need to be completed before a construction project is considered finished. Punch list items typically do not affect the structural integrity of the project or prevent the issuance of a certificate of occupancy. The list may include things like touch-up painting, installing fixtures, or minor repairs.

When Must Construction Liens Be Filed?
In North Carolina, a contractor must file a claim of lien on real property within 120 days after the last furnishing of labor or materials to the project. To enforce the lien, a lawsuit must be filed within 180 days after the last furnishing of labor or materials. Subcontractors can also file a Notice of Claim of Lien Upon Funds at any time, and if necessary, a subrogation lien on real property within the same time frame. Always consult with an attorney to ensure compliance with these deadlines.

If you have additional questions or concerns about construction law or contracts, contact the experienced construction attorneys at Ferikes Bleynat & Cannon to guide you through the process.