Tag Archives: Raleigh construction lawyer

June 26, 2012 · 6:45 AM

“Who Are You?” To Preserve Lien Rights Against Owners, Get the Right Answer to that Question!

I’m psyched to present another guest blogger this week: Lewis & Roberts construction & surety law associate extraordinaire, Jessica Bowers. It’s been my distinct pleasure to work with Jessica since she joined L&R in October 2010. Jess has represented owners, developers, GC’s and subs, and her practice has seen an increasing emphasis on serving the needs of surety companies. A member of the State bar since 2005, Jess was a recipient of the bar’s Pro Bono Public Service Award that year.

If you’re like me, you might find yourself softly singing the catchy chorus from the Who’s “Who Are You” as you consider the North Carolina Court of Appeals’ June 5, 2012 decision in Young & McQueen Grading Company, Inc. v. Mar-Comm & Assocs., Inc. et al.

The case involved a good deal of confusion regarding the correct identity of the owner of a construction project, confusion that complicated the contractor’s assertion of its mechanic’s lien rights against the owner’s property.

Rest easy, the contractor ended up prevailing and holding on to its lien rights. But it sure wasn’t easy! The decision reminds us how critical it is at the beginning of a project to determine the correct identity of the owner of the improvement by obtaining an accurate answer to one simple question:

Who are you?

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Filed under Feature story, Lien Law, NC case law

Tagged as claim of lien errors, naming owner in claim of lien, NC construction law, NC construction lawyer, nc court of appeals, nc mechanics lien, raleigh construction law, Raleigh construction lawyer

June 5, 2012 · 6:37 AM

What Contractors Should Know About the Surety Bond Underwriting Process

Danielle Rodabaugh of SuretyBonds.com

I’m thrilled to welcome my first guest blogger, Danielle Rodabaugh, to N.C. Construction Law, Policy & News. Danielle is chief editor at SuretyBonds.com, a nationwide surety provider that issues construction bonds to contractors every day. As a part of the company’s educational outreach program, Danielle writes articles to help construction professionals understand the intricacies of surety bonds and the underwriting process. You can keep up with Danielle on Google+.

Whether you’re new to the construction industry or have decades of experience under your belt, you probably have some questions about surety bond acquisition and what goes into the underwriting process. Before we go much further, though, I’d like to review the basics of how surety bonds work and why they’re required.

Surety bonds ensure project completion.

When surety bonds are used on projects, they’re known as “contract bonds” or “construction bonds.” Project owners require them to ensure construction professionals work according to terms laid out in contracts.

There are a number of different contract bond types. Some of the most common ones are license bonds, bid bonds, performance bonds and payment bonds. No matter what kind of surety bond you need, it will function as a legally enforceable contract that binds together three parties:

The individual contractor or contracting firm that buys the bond is the principal.
The project owner, which is typically a state agency, that requires the contractor to be bonded is the obligee.
The insurance company that issues the bond bond is the surety.

If a contractor fails to fulfill the bond’s terms, then the obligee can make a claim on the bond’s sum to gain reparation for any damages or financial losses.

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Filed under Payment Bonds, Performance Bonds, Surety Law

Tagged as bid bonds NC, bond underwriting nc, bonding capacity nc, construction bonding nc, NC construction lawyer, payment bonds NC, performance bonds NC, Raleigh construction lawyer, surety bonds, underwriting for bonds

May 17, 2012 · 11:02 AM

A Tip For Performance Bond Obligees: For Maximum Protection, Obtain Increase Riders With Change Orders

You’re the authorized agent of a North Carolina county that has entered into an $8 million contract with a general contractor for the construction of a new administrative building. The performance bond issued on behalf of the GC is in the statutory form, and therefore applies not only to base scope, but also to “any and all duly authorized modifications of said contract…notice of which modifications to the Surety being hereby waived[.]” N.C. Gen. Stat. § 44A-33(a). The penal sum of the bond corresponds to the contract’s original value — i.e., $8 million.

As the GC begins mobilization, you’re informed that the county has obtained the funding necessary to build an additional wing to the building. That work had been an alternate in the bidding process, but was rejected by the county when the bids came in higher than the architect’s estimate, leading the county to award a contract to the GC for base bid work only. Now that the additional funding has been appropriated to the project, the $500,000 additional wing can be added to the GC’s scope of work by change order.

You discuss the scope change with the GC, who’s excited about the additional work. A change order is executed, and requires the GC to provide notice of the change to the surety. You’re told such notice has been given. The County now has $8.5 million in protection under the performance bond, right?

Not so fast, Sparky.

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