Is the lien waiver our subcontract makes us sign to get a progress payment enforceable?
Only if it is limited to the interim or progress payment actually received. N.C.G.S. § 22B-5(a) makes provisions in lien waivers, releases, construction agreements as defined in G.S. 22B-1(f)(1), or design professional agreements as defined in G.S. 22B-1(f)(5) that purport 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 promisee 'void and unenforceable unless limited to the specific interim or progress payment actually received by the promisor in exchange for the lien waiver'. The operative words are 'actually received': the test is not whether the waiver is conditional in form but whether it is confined to the payment the promisor in fact got. Be careful about what the statute then does, because this is the point most often assumed. Its words make the offending provision 'void and unenforceable' and stop there. They do not say that an over-broad waiver is cut back to the payment received, and whether a North Carolina court would enforce such a waiver up to that amount rather than strike it was not established here: no North Carolina decision was examined for this answer. Both agreement types § 22B-5 operates on are defined in G.S. 22B-1(f), and 'design professional agreement' is defined through 'design professional', which G.S. 22B-1(f)(4) confines to a person or entity licensed under and providing professional services regulated by Chapters 83A, 89A, 89C, 89E or 89F of the General Statutes.
The trap
Read subsection (b) before relying on the section. It takes two situations out of § 22B-5 entirely: lien waivers or releases for FINAL payments, and agreements to settle and compromise disputed claims after the claim has been identified by the claimant in writing, regardless of whether the promisor has started a civil action or an arbitration. So the broad release attached to the final application for payment is outside the protection, as is the release in a settlement of a claim the subcontractor has already put in writing. The section is also bounded by the definitions it borrows: 'construction agreement' in G.S. 22B-1(f)(1) is a contract relative to the design, planning, construction, alteration, repair or maintenance of a building, structure, highway, road, appurtenance or appliance, including moving, demolition and excavating connected with it, and 'design professional agreement' in G.S. 22B-1(f)(5) reaches only an agreement with a design professional, which G.S. 22B-1(f)(4) ties to licensure under Chapters 83A, 89A, 89C, 89E or 89F. NOT ESTABLISHED HERE: whether a lien waiver that recites payment the subcontractor never received is effective against an owner who relied on it, and the mechanics of the lien itself under Chapter 44A. No Chapter 44A section and no North Carolina opinion was read for this rule. Two measurements show how wide that reservation is. A search of North Carolina case law finds a single Court of Appeals decision that mentions § 22B-5; it was not read here, and whether it is citable authority was not determined. And a re-run of the search across the published North Carolina statutes finds 'waiver of lien' and 'waiver of liens' in § 22B-5 alone, but 'release of lien' in seven sections and 'release of liens' in four (among them §§ 44A-24.11, 47C-4-111, 93A-57 and 93A-58), and 'lien rights' in §§ 143-128.1C, 44A-11.2 and 44-50.1. None of those sections was read for this answer, so what any of them does to a progress-payment release is open. Where this rule reaches for § 22B-1, that section stops short of two things: “This section shall not affect an insurance contract, workers' compensation, or any other agreement issued by an insurer. This section shall not apply to lien or bond claims asserted under Chapter 44A of the General Statutes.” The second matters most here, because a progress-payment lien waiver fight is a Chapter 44A fight, and § 22B-1 does not reach it. But read that carve-out to the right section: it is § 22B-1 that excludes Chapter 44A claims, not § 22B-5, whose only exclusions are the two in its own subsection (b). The Chapter 44A character of a lien fight is therefore not by itself a reason § 22B-5 would fail to reach the waiver.
5 authorities
- statuteN.C.G.S. § 22B-5enactment date not established
The words that state the rule
Provisions in lien waivers, releases, construction agreements as defined in G.S. 22B-1(f)(1), or design professional agreements as defined in G.S. 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 promisee under a construction agreement or design professional agreement are void and unenforceable unless limited to the specific interim or progress payment actually received by the promisor in exchange for the lien waiver.
- statuteN.C.G.S. § 22B-5enactment date not established
The words that state the rule
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 claimant in writing regardless of whether the promisor has initiated a civil action or arbitration proceeding.
- statuteN.C.G.S. § 22B-1enactment date not established
The words that state the rule
(f) For purposes of this section, the following definitions shall apply: (1) Construction agreement. - Any promise or agreement in, or in connection with, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, or appliance, including moving, demolition, and excavating connected therewith.
- statuteN.C.G.S. § 22B-1enactment date not established
The words that state the rule
This section shall not affect an insurance contract, workers' compensation, or any other agreement issued by an insurer. This section shall not apply to lien or bond claims asserted under Chapter 44A of the General Statutes.
- statuteN.C.G.S. § 22B-1enactment date not established
The words that state the rule
(4) Design professional. - A person or entity who is licensed under and provides professional services regulated by Chapters 83A, 89A, 89C, 89E, or 89F of the General Statutes. (5) Design professional agreement. - Any promise or agreement in, or in connection with, a contract or agreement with a design professional to provide design professional services. (6) Design professional services. - A service or work performed by a design professional for which licensure is required under Chapters 83A, 89A, 89C, 89E, or 89F of the General Statutes.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.