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Home>Levelset Community>Legal Help>Customer is asking to sign a subcontractor's/supplier's affidavit of interim payment and release of lien form. What are the implications of signing it or not signing it?

Customer is asking to sign a subcontractor's/supplier's affidavit of interim payment and release of lien form. What are the implications of signing it or not signing it?

North CarolinaLien WaiversPrompt Payment

Hello, Customer is asking to sign a lien waiver with language that states: In consideration of the progress payment of $x the receipt and sufficiency of which are hereby acknowledged, the undersigned and subcontractor or supplier for the above project warrants and represents to Contractor and to Owner that all persons, firms, associations, corporations or other entities furnishing labor, materials, services or equipment to the undersigned through the date hereof and all other items in connection therewith, including without limitation all payroll, sales and privilege taxes, have been paid in full up to and including the most recent previous progress payment or will otherwise be paid in accordance with North Carolina Prompt Payment Act and applicable law. I looked into the North Carolina Prompt Payment Act and it stipulates that subcontractors must pay their suppliers within 7 days of receiving payment from customer. However, we have no way of tracking that as our supplier terms are different from our customer payment terms. As a company who has provided material in the state of North Carolina - are we required to fill out this form for the customer who is requesting it? Are we required to make payment to our suppliers within 7 days of receiving payment from customer? Can you please help! Thanks, Amena

1 reply

Mar 23, 2018
First, I'll note that North Carolina is a state where there is no statutorily mandated form for lien waivers. So, if you're uncomfortable with certain waiver language, there may be an opportunity to negotiate different waiver terms. Anyway, according to the language posted here, it looks like the waiver is confirming that either: (1) all payments have been made; or (2) if payments haven't been made, they will be made pursuant to the North Carolina prompt payment laws. Regarding whether payments must be made according to North Carolina's prompt payment statute, that could depend on a number of different factors that would take much more analysis than available in this forum. By the letter of the law, though, in North Carolina - each contractor and each subcontractor providing labor and/or materials is required to make payments to their subcontractors within 7 days of receiving of each periodic or final payment.
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