North Carolina maintains a version of the federal Little Miller Act, which protects public construction projects from liens by mandating that all contractors maintain performance and payment bonds in the amount of the full value of the contract.
The “Little Miller Act” version for North Carolina has a number of interesting caveats compared to other states. Time frames around notice of a claim or even notice of a subcontractual relationship are quite strict, and NCGS § 44A‑35 provides that whichever side wins a case in a Little Miller Act-related bond claim can be furnished attorneys fees if they are awarded by the judge.
In other words, claimants have to pay close attention to the related claim and notice periods in relation to the last day they provided work. Either side in a claim must also be wary of the added penalty of paying attorney fees when losing a Little Miller Act case.
Contractors and claimants curious about the most important details of North Carolina’s Little Miller Act Statute (NCGS 44A) can read on for more specific information.
Requirement of Payment and Performance Bonds for Public Contracts
NCGS § 44A‑26 provides that all public works projects exceeding a total contract value of $300,000 shall require a performance and payment bond valued at 100 percent of the total contract. All subcontractors involved in a project are required to provide a performance and payment bond if the value of their labor and materials provided exceeds $50,000.
Performance bonds protect the contract awarding body from the risk of non-completion of work, and payment bonds protect any subcontracting parties or materials vendors from the risk of non-payment.
The total amount of judgements made upon claims related to performance or payment bonds shall not exceed the total value of the bond (NCGS § 44A‑29), meaning that each party involved can only claim their contributed value to the project, not the full value of the overall bond.
Requirement of Notice and Window for Filing Claims
If someone wishes to initiate a claim upon a payment bond, they must wait at least 90 days after the last day in which they provided labor or materials for a project (NCGS § 44A‑27 a). They have a year from the date in which to file their action against the surety providing the payment or performance bond (NCGS § 44A‑28).
An important caveat applies to subcontracting parties engaged in an indirect relationship with the contractor holding the payment bond they wish to make a claim upon. Their claim must be made within 120 days of the last work or materials contributed to the project, and they must also provide notice that they have provided a subcontractual service unless the total value provided is $20,000 or less. If the subcontractor is required to provide notice, they cannot make a claim on any work or materials provided more than 75 days after the notice was given (NCGS § 44A‑27 b, e).
Put more clearly, a subcontractor should notify a higher-tier contract holder of their subcontractual relationship within 75 days of providing work or materials on a shared project, and they should file a claim upon a payment bond within 120 days in order for that claim to be valid.
Requirement to Provide Copies of Performance and Payment Bonds
All contractors holding performance or payment bonds must provide copies of these bonds within seven days of a request, and the public entity awarding the project contract must provide a copy within 10 days (NCGS § 44A‑31).
Answering Other Questions About North Carolina’s Little Miller Act
North Carolina’s Little Miller Act is a bit more strict and complicated than other states, but there is a clear set of laws and related case laws to help shed light on any confusion.
If you are looking for more information on the laws related to North Carolina’s Little Miller Act or want to procure a performance or payment bond related to a public project in the state, then you can get in touch with a bonding expert today.