Broad-form lien waivers are no longer part of the game in North Carolina | Strawberry and Forman

North Carolina Avenue is one of the hottest properties in Monopoly, say most of my kids. And if you’re a contractor or subcontractor in North Carolina, lawmakers recently granted you additional protections for your lien rights.

While many states prohibit potential waivers of lien, that is, an anticipated waiver of lien rights typically included in a construction contract before the work is performed or the lien occurs, the North Carolina General Assembly recently passed a new law that provides additional protections. .

The law, effective March 1, 2022, states that a waiver similar to an advanced or broad lien under a progress payment is also not enforceable. In other words, under the new law, general waivers exchanged for installment payments will be limited to the amount of the payment Actually received. The statute provides:

(a) Provisions in Lien Waivers, Releases, Construction Agreements as defined in GS 22B-1(f)(1), or Design Professional Agreements as defined in GS 22B-1(f)( 5) purporting to require a promisor to submit a waiver or release of liens or claims as a condition of receiving interim or progress payments due from a beneficiary under a construction agreement or professional agreement of design are void and unenforceable unless limited to the specific interim or progress payment actually received by the promisor in exchange for the waiver of the lien.
(b) This section does not apply to the following:
(1) Lien Waivers or Releases for Final Payments.
(2) Agreements to settle and compromise disputed claims after the claim has been identified by the plaintiff in writing, whether the promisor has commenced a civil action or an arbitration proceeding.

NC Gen. Stat. § 22B-5

Although “no lien” contractual provisions are illegal in North Carolina, the new law seeks to extend protection to contractors and subcontractors who are asked to waive lien rights unconditionally until a specific date. as part of the progressive payment process. Now, in North Carolina, it is clearer that a waiver of lien is only valid for payment actually received from the contractor or subcontractor.

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