Lawsuits are common in construction projects. Construction is a magnet for litigation due to the size and complexity of modern projects. The fact that construction sites are crowded with parties involved in the work (owners, architects, engineers, general contractors, subcontractors, suppliers, etc...) as well as government representatives and inspectors making sure federal, state, and local laws are followed does not simplify the situation. Just trying to do your job can be like walking through a cow pasture barefoot. So what can you do to make things better? The following is a list of suggestions that may reduce your risk of stepping into something you would rather avoid:

1. Get a lawyer. Develop a relationship with a lawyer before you need one. Choosing the person you want to represent you should not be a hasty decision. Shop around and find a lawyer you feel comfortable with that knows something about your business. This familiarity will decrease the time it takes your lawyer to understand your claims.

2. Read your contract (and make sure you understand it). If you are not clear on what you will be required to do, ask. Do not sign a contract unless the written terms clearly indicate your duties as you understand them. If the contract says one thing but the other party is telling you something else, realize that you will be held to the contract, not the verbal agreement.

3. Avoid trouble. Don’t get into a contract with a person who has the reputation of always getting into disputes. In the long run, not taking certain jobs is more profitable than taking some. Likewise, don’t take a job you cannot handle.

4. Identify problems early. Try to diffuse problems before they become disputes. Disputes usually occur when people allow small problems to linger without addressing them. Keeping communication lines open is essential to avoiding disputes. When disputes arise, contact your lawyer and insurance carrier as soon as possible. A little time and money up front is an investment that may pay off in avoiding a lawsuit.

5. Keep good records. Be precise in requests for change orders. Document problems on the site giving a detailed description of causes, effects, and costs. Take pictures and/or video. Record who was on the site to witness the problem. Don’t waste your opportunity to create proof of your claim. Cases are won and lost on brief notes and 3x5 pictures.

6. Abide by accepted procedures. Do not deviate from the standard in your industry for your type of work. Using unproven methods is a risky business. If the customer wants something out of the ordinary, give them a written notice of the potential problems and make them sign it.

7. Limit your exposure to liability. Get insurance. Incorporate or form some liability limiting entity. Be properly licensed. Get regular training and attend seminars covering topics in your field. Avoid construction work where the risks involved are not greater than the profit you might get.

Even the most careful person can be sued. However, following the above advice can also greatly enhance your ability to resolve those disputes that turn into litigation in a swift and favorable way.

​This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

Liens

North Carolina law allows contractors on private projects certain lien rights. Liens are not allowed on public property.

Effective April 1, 2013 the Legislature amended the lien law.

For projects over $30,000 excluding residential projects by the homeowner, the owner must designate a Lien Agent, typically a title insurance company. The Lien Agent’s contact information must be posted on or near the permit. Although a permit is not supposed to be issued without this information, an owner is also required to provide such information upon written request.

The statute requires contractors who deal with material suppliers (ie. folks who do not show up on the job site to see the permit), within 3 days of contracting, they must provide the Lien Agent’s information. The statute says this can be accomplished by putting the information in the contract/ PO.

If a contractor or subcontractor who works on a project wants to keep his lien rights, within 15 days of starting on the project, he needs to provide the Lien Agent with his contract information. The statute provides a form to use and the form must be sent by some method where you can get a receipt including hand delivery, fax, email or certified mail. To be effective against a transfer, a contractor must also either A) give the notice OR B) record a claim of lien before a transfer deed is recorded.

After the initial notice, a contractor’s lien rights depend on whether or not it dealt with the owner of the property.

A contractor who dealt directly with the owner is entitled to a lien on the property. To receive these lien rights a contractor must: 1) file a Claim of Lien within 120 days of the date it last worked on the project or supplied materials and 2) file a lawsuit to perfect the lien within 180 days of the date it last worked on the project or supplied materials. Both the lien and the lawsuit should be filed with the clerk’s office in the county where the property is located.

The lien rights of a subcontractor, or one who did not deal directly with the owner, include a lien on funds and a subrogated lien. To receive a lien on funds, a subcontractor must prepare a Notice of Claim of Lien and send it by certified mail to anyone above him in the contract chain. Upon receipt of the notice, parties are obligated to retain funds in the amount stated. If a party fails to retain these funds, it becomes personally liable to the subcontractor. If the owner pays in violation of the notice and the subcontractor also filed a proper claim of lien at the courthouse, the subcontractor has a lien on the property to the extent of the wrongful payment.

A subcontractor also has subrogated lien rights. By filing the proper papers, a subcontractor can obtain a lien on the property through the lien of the contractor and any higher tier subcontractors. Since a subcontractor’s subrogated lien rights depend on other parties, an owner may defend a subrogated lien with the defenses of the higher tier subcontractors and the contractor. Contractors can cut off the rights of second or third tier subcontractors by posting and filing a Notice of Contract within 30 days following the issuance of the building permit. Subcontractors, however, can renew their rights by responding to the contractor with a Notice of Subcontract.

Bonds

Bond claims may be available on private jobs. Bond rights are stated in the bond itself. It is essential to obtain a copy of the bond from the owner to determine your bond rights. Often private bond claim rights expire after 90 days of last working or providing materials on the job site (as opposed to the 120 days on a public project). If your job has a bond, know its terms before you have a problem or you may lose your bond rights before you know what they are.

State and federal bond rights vary. Generally speaking, public projects valued at over $300,000 must have performance and payment bonds. The purpose of a performance bond is to ensure the owner that the project gets completed and subcontractors/ suppliers paid. The purpose of the payment bond is to protect contractors and subcontractors who provide labor and materials to a public job. Upon proper request by a subcontractor, contractors are required to provide a copy of the bond within 7 days. Notices required:

     - Contractors are required to give the subcontractors they deal with a notice containing various information (project name, project address, etc). Subcontractors & suppliers who receive this information are required to pass it on to their subcontractors and suppliers.

     - If you deal with the general contractor (person who contracted with government agency), then notice may not be required. If you did not deal with the general contractor, then notice by certified mail is required to be sent to the general contractor (usually within 120 days of last supplying material or labor to project). It is a good idea to send a copy (certified mail) to the surety, owner/government agency and other affected parties.

     - The statute also provides a form for subcontractors and suppliers to send to contractors within the first 75 days on a project.

Failure to send proper notice may result in your claim being limited to $20,000 or labor/ materials provided within 75 days service of notice.

Bond claims must be perfected by filing a lawsuit within one year of last providing labor or materials to the debtor for the job site.

For lien and bond claims, the law provides for the recovery of attorney fees if the other party unreasonably refused to resolve the dispute.

This area of the law can be very complex and you are encouraged to seek competent legal advice. The deadlines, notices and amounts are statutory and subject to change from time to time.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

_Before beginning a job, it is important that you carefully read the requirements of the contract governing payment for extra work and/or extra materials provided to the project. Contracts often have specific notice requirements regarding claims for extra work along with a requirement that you obtain a written order from the other contracting party prior to starting any extra work. North Carolina courts will enforce both the notice requirement and the requirement of a written change order. This means that if you did not provide the required notice or failed to obtain a written change order, the courts may not require payment for the additional work even though all of the parties may have been aware of the claim for extra work from the moment the claim arose.

In sum, to get paid for extra work you have to comply with the contract. If the contract requires written notice, verbal notice of a claim for extra work does not comply with the contract’s requirements. If the contract requires a signed change order before you start the additional work, wait until you have a signed change order.

But what if the contract is silent? Then the issue becomes a matter of proof. With the ease of email in mobile phones, if someone tells you to do something extra on a job, shoot them an email and ask them to just reply and confirm. Be sure to include the material information as to scope of work and payment. This type of proof can avoid people forgetting verbal agreements to pay. This practice may keep you out of court, but if you end up in a dispute, this kind of proof can help you win.

Finally, in order to limit disputes over the value of the additional work, keep detailed records of all of your expenses (labor, equipment and materials). It is also a good idea to keep the other party well advised as to the cost of the extra work. Your chances of payment without a dispute are greater if the other party isn’t surprised by the cost of the extra work.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

_ If a contractor works on a project and discovers a dangerous or defective condition, he should definitely tell the owner of the condition. But what if the homeowner can’t afford or just doesn’t want to repair or remove the condition? Or what if a homeowner specifically directs a contractor to do something that the contractor knows won't work?

If the contractor follows the homeowner’s instructions, can the contractor be held liable simply because he worked on the project? For instance, a contractor discovers a crack forming in a furnace. He tells the owner and the owner promises to get it fixed. A month passes and the homeowner doesn’t fix the problem. The furnace explodes and the homeowner is dead. The homeowner’s estate sues you because you worked on part of the furnace. You explain what happened but your only proof is your recollection of a conversation with a dead person. Do you want to be put in this situation? How could the contractor have protect himself? The best step is to have the homeowner sign a waiver and release before leaving the job. A possible release is set forth below:

    FULL WAIVER AND RELEASE OF LIABILITY

    I, [owner], have been duly warned by [contractor], on [date], that [problem] exists on my property located at [address]. [Contractor] has advised me of a problem involving [problem] which has a potential for causing [danger]. [Contractor] has advised me that if this problem is not fixed, it could result in death or harmful injury to myself and others. At this point, I do not wish [contractor] to perform the necessary repairs. My signature below acknowledges that I have been advised of the problem described above, that I understand the risks involved, that I release [contractor] from any possible liability, and I take responsibility to warn and protect other persons who may be affected by the danger.

    [Date]

    [Signature of owner]

The above waiver should be presented to the owner as soon as he declines to fix the problem.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

The law allows a defendant who has a judgment against him/herself to keep some of his/her property, which is called “exempt” property. Before the clerk can issue a writ of execution, an individual defendant must be served with a Notice of Right to Have Exemptions Designated.

After receiving the exemption forms (by sheriff or by certified mail- but if you refuse certified mail the papers can be served by regular mail), a defendant has 20 days to fill out the Motion to Claim Exempt Property, mail or deliver it to the clerk's office, and send a copy to the plaintiff’s lawyer. If a defendant does not return the form in the 20-day period, exemptions are waived.

Statutory exemptions in North Carolina are set up based on different types of property. In some cases the type of property is totally exempt and in other, limits are set for the amount of each type of property that can be exempt. (In addition to the exemptions described here, there are other state and federal exemptions that you may be entitled to claim, such as 60 days worth of Social Security benefits, unemployment benefits, workers' compensation benefits, and earnings for your personal services.)

Exemption limits are based on the “equity value” of your interest in each item of property. To determine your equity value in an item, follow these steps:
1. Determine the fair market value of your interest in the item. “Fair market value” means what you could sell the item for (at the flea market, for example).  If you co-own the item with someone else, only the fair market value of your share of the property is counted.
2. Determine the amount owed (lien pay-off) to each creditor who has a security interest in the item.
3.Subtract #2 from #1.
For example: You have a truck that has a value of $5,000. You owe the bank $3,000. You have a $2,000 equity value in the truck.

What Property Can Be Exempt? Under the statutory exemptions in North Carolina, each debtor can exempt:
#5. Up to $35,000 in land, house, mobile home or other property used as a residence, or burial plots. (Additional protections may apply to real property or mobile homes owned by married persons and unmarried persons who are 65 years of age or older.)

#6 Up to $5,000 in clothes, household furnishings and goods, appliances, books, animals, crops, and musical instruments which are used primarily for personal, family, or household use. (This amount increases $1,000 for each dependent of the debtor up to a maximum of four (4) dependents.) 

If you want to try to exempt funds in a bank account earned from personal services, add some language like this: “This account contains only earnings from my personal services, which personal services were performed within the last 60 days. These earnings are necessary for my support and/or the support of my family and should be exempt. All future money entering this account will also come from personal services.” GS 1-362

#7 Up to $3,500 in one automobile.

#8 Up to $5,000 in any property (this amount is reduced by the amount of exemption claimed for residence or burial plot).

#9 Items of health care aid necessary for you or your dependents to work or sustain health.

#10 Up to $2,000 in books, tools, or other implements used in the trade of a debtor or dependent of the debtor. 

#11 Life insurance policies listing a spouse and/or children as beneficiaries. 

#12 Compensation for personal injury or for the death of a person upon whom you depend for support (unless the judgment is for services related to the compensated injury).

#13 Individual retirement accounts, including individual retirement annuities and Roth retirement accounts.

#14 Funds up to $25,000 in college savings plans under certain conditions.

#15 Other state or governmental retirement accounts.

#16 Alimony, support, separate maintenance, and child support payments necessary for your support.

What Property Is Not Protected? Exemptions don't apply to the following:
▸ all of your property, if you fail to claim your exemptions on time!
▸ the value of property in excess of the exemption amounts allowed.
▸ personal property purchased less than 90 days before the judgment collection proceedings begin.
▸ claims of the Federal government or its agencies, to the extent that federal law so provides.
▸ claims of the State or its subdivisions for taxes, appearance bonds, or fiduciary bonds.
▸ claims for liens placed by law against specific property.
▸ if a creditor takes a security interest in connection with the purchase of an item, the item is not exempt from a judgment for the property by that creditor.
▸ orders for child support, alimony, or property distribution related to divorce or alimony.
▸ property owned by debtors who do not reside in North Carolina.
▸ judgments against corporations.

Tips For Protecting Your Exemption Rights
 1.  Notify the Clerk of Court and judgment creditor(s) if you change addresses after a judgment is entered. If you cannot be located for personal service by the Sheriff or by certified mail, service of the exemption notice can be made by regular mail to your “last known” address, whether or not you actually receive it.

2. Carefully read all mail and Court notices you receive. Your 20-day time limit for claiming exemptions begins on the day after you are served with the exemption notice.

3. Read and follow the instructions stated on the Motion form. Complete each section of the Motion.  Make sure you list all of your property, including your share of property owned with others. You can attach additional pages if necessary.  Values should be based on what you reasonably believe you could sell the item for, at a flea market, for example.  If an item has no equity value (see above), you should list the item with a “$0" value.

4. Make sure to follow instructions at the end of the Motion for signing, dating, and serving your Motion. One copy of the Motion must be filed with the Court, and a copy must also be sent to the creditor - all within the 20 day time limit.

5. If you need help completing the exemption motion, if you own property in excess of exemption limits, or if the creditor objects to your exemptions, promptly contact an attorney or your local Legal Aid of North Carolina office for assistance.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

You have places to go and people to see. Catching red lights is getting on your nerves. You decide to speed up. Somebody pulls out in front of you and SLAM! you didn’t have enough time to stop. Now you’re really going to be late.

This is an unfortunate scene played out on the streets of every city every day. It does not matter whether you are totally at fault, partially at fault, or totally innocent- you have to deal with the accident. Below are some tips that, if followed, should guide you through the aftermath of an accident with the least cost and stress.

•  Stop. North Carolina law requires that drivers involved in an accident stop at the scene of an accident.
•  Call for help. If someone is injured, call an ambulance. Rendering reasonable assistance will not expose you to liability, but it is generally not a good idea to attempt to provide medical assistance unless you have training. You may leave the scene to get assistance, but you must return as soon as possible. Also, notify the police if the accident involved an unattended car or caused property damage over $500.
• Remove obstructions from traffic. If cars can be moved and doing so will not destroy evidence, clear the road. If you cannot move cars due to damage or if you feel the officer needs to view the scene before it is changed, do what you can to alert oncoming traffic.
  
• Assemble information. As soon as the officer arrives you will have to produce your license, car registration, and insurance information. Have this information handy in your car. If necessary, take notes so you remember important details like your speed and position, the weather, the layout of the road/intersection, the identity of any witnesses, and the name of the officer making the report. The officer will fill out a report, but by making your own notes you insure that information will not be lost. Taking pictures of the scene can greatly help you in a lawsuit. Use a camera-phone if you have it or you can keep a disposable camera in your car or maybe you’re accident will be in front of a supermarket or gas station that sells cameras. If any witnesses stopped to help be sure and get their names and contact information.
• Avoid speaking to the other driver. There are two reasons for this. First, the other driver may be so angry that any contact may create a threat to your safety. Second, it prevents you from making a statement you will later regret. The trauma of an accident may prompt some drivers to say seemingly innocent things like “I’m so sorry” or “I never saw you” and some drivers may feel compelled to offer to pay for damages. These statements are not so innocent sounding when repeated in a courtroom. Don’t make them.
• Before leaving the scene... Make sure you have information regarding the other driver including name and address, passengers’ names and addresses, the number of the police report, and the other driver’s insurance information.
• After the accident... If you have any discomfort or concern, see a doctor. If there’s a chance the other driver might sue you, call your insurance company so they can prepare for the claim. If you think you might want to sue the other driver, contact a lawyer. In all three cases, the sooner these parties get involved, the better.

You can’t avoid all car accidents by safe driving. Therefore knowing how to deal with an accident is vital. Following these tips should navigate you through an accident with the least exposure to liability as well as the greatest protection of your legal rights.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

“If you fail to plan, you plan to fail.” Given this common sense and the “certainty” of death and taxes, it is a wonder why so many people put off basic estate planning. If you own property, have any dependants, or have a spouse/significant other, then you should consider some basic estate planning- regardless of your age or health. This type of planning insures the best “transition” when your time on this earth expires. Furthermore, good planning covers the situation where you, while remaining alive, are incapable of making your own decisions. Typical estate planning documents include:

WILL. A will governs the distribution of your property. If you die without a will, you die “intestate.” The law assumes how people who die intestate would want their property divided. However, in many cases, the law will not pass your property according to your wishes. For instance, if you die without a will and leave a spouse and no children, your spouse might only get the first $25,000 plus half of all remaining assets with your parents getting the rest. Most people would want their spouse to get all of their assets. A will can also state special gifts (to relatives, friends, charities or schools) or appoint a guardian for your children.

DURABLE POWER OF ATTORNEY. A power of attorney allows another person to act for you regarding personal or financial matters. A power of attorney is only valid if you could have done the act yourself (still living). A durable power of attorney allows someone to act for you even when you are “incapacitated.”

HEALTH CARE POWER OF ATTORNEY. As the name suggests, this is a type of power of attorney specifically dealing with medical issues. This document allows another person, your health care agent, to make decisions for you regarding your medical treatment when you cannot make the decision for yourself. North Carolina law changed in 2007 incorporating what is commonly referred to as a “LIVING WILL” into a health care power of attorney. A living will states your desires regarding the use of “extraordinary measures” to keep you alive in the event you become incapacitated. In other words, do you want to remain “hooked up to a machine” if that is the only thing keeping you alive? This document should eliminate a family dispute over your medical treatment.

Basic estate planning should give you peace of mind. You know you’ve done the right thing in preparing for your end of life. Remember: in many cases when you need these documents it’s too late to get them. As far as those “Do-it-Yourself” lawyer forms you can get, depending on what you get, they may do the job. Be aware that 1) sometimes you get what you pay for and 2) every state has different laws. Whether you need to review your existing estate documents or whether need to have them drafted, we encourage you to consult an attorney over these important matters.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at 861-0693.

You’re not a lawyer and you’ve never sued anybody or been sued by anybody. You’ve heard about problems with the legal system and you’d rather it just leave you alone. Then it comes in the mail. You’ve been selected for jury duty. Most people’s first thought is “how can I get out of this?” Well hold that thought. Have you ever really thought about jury duty?

Jury duty is your chance to be part of the legal system. Your chance to be part of the solution. Think about it. Most of the “big cases” go to trial and are decided by a jury. People are responsible for those huge verdicts and those not guilty verdicts.

Now I’m not saying that jury duty is glamourous or even interesting. In fact, it can be very boring. You show up and have to wait until jury selection. In jury selection you are asked questions about yourself that, in some cases, can be personal. During the trial you have to sit and listen to hours of testimony. The monotony of the trial is only interrupted by trips to the jury room so the lawyers can argue. You do get out of work- but that may add to your headaches because work may pile up or your time may be unpaid. To add insult to injury, the pay you get being a juror may not even cover parking.

But jury duty is a vital part of our justice system. Now, there are problems with the legal system. They start with unreasonable clients. Add unprofessional lawyers. Mix in some judges who won’t make proper decisions and a media with an agenda. Finish it off with a jury with a mind of its own and there’s your recipe for injustice. Most cases don’t have all these ingredients. In fact, I’d venture to say most cases have none or only one of these ingredients. But it just takes a couple of cases with these ingredients to give a justice system a black eye.

In fact, many of the “problems with the legal system” are more in perception than in reality. We’ve got a pretty good system. One reason for the system’s success is because people like you participate in jury duty. It’s a civic duty, like voting. It’s your part of the legal system. It’s your way to insure that the system works. So when you get that jury duty notice, think of it as your opportunity to make a positive difference rather than a stroke of bad luck.

This article is meant as general knowledge and not meant to substitute for legal advice on specific issues. If you have a question, please call Doug McClanahan at (919) 861-0693.