The amended North Carolina Limited Liability Company Act (“Act”), effective January 1, 2014 places the manner in which an LLC is operated squarely upon the terms of the operating agreement. The amended Act contains an entire section dedicated to the operating agreement. Under the amended Act, the operating agreement governs the internal affairs of the LLC and the right, duties and obligations of the interest owners of the LLC and the rights of any other persons to become interest owners in relation to each other and the LLC and company officials in relation to each other, the LLC and other interest owners. The provision of the Act and common law apply only to the extent contrary or inconsistent provisions are not made in the operating agreement.

There are very few limitations with respect to the provisions that the operating agreement may not supplant, vary or disclaim. These include but may not be limited to:

• Filings and payments to the Secretary of State
• Making the operating agreement apply to persons who are not parties
• Eliminating the right of a member to bring a derivative action
• Eliminating the right of a member to request judicial dissolution
• Limiting restrictions on distributions and liability from wrongful distributions
• Limiting a member’s right to information as set forth in the Act

One interesting provision is that the operating agreement may provide for the forum in which disputes concerning the LLC or the rights and duties of interest owners and other parties to the operating Agreement are to be resolved.

Oral or implied provisions in the operating agreement may not supplant, vary, disclaim or nullify any contrary or inconsistent written provisions of the operating agreement to the detriment of the rights of persons not parties to the operating agreement to the extent that they reasonably rely on those written provisions of the operating agreement. Nothing prohibits an oral agreement, but the best practice is to always put it in writing.

Finally, the implied covenant of good faith and fair dealing and the requirement that the operating agreement not be unconscionable at the time made govern the enforcement of the operating agreement are specifically set forth in the Act.

NC lien laws changed in 2013. All North Carolina general contractors should be aware of the changes. The lien law requires that you Post the Notice of Contract in the permit box on the job site. In addition, you will need to file the Notice of Contract with the clerk of court in the county where the property is located. If you are served with a signed notice of subcontract, you must serve on the subcontractor via certified mail, the written notice of payment setting forth the date of payment and the period for which payment is made as requested in the notice of subcontract form. These are required by NCGS § 44A-23.

The new laws require some additional paperwork. As the general contractor, you must serve on the lien agent a completed “Notice to Lien Agent Form”. This must be done within 15 days of first providing labor or materials (signing contract) on the project. In addition, you must also provide a copy of the contact information for the lien agent to any subcontractor or material supplier that you contract with within 3 days of the contract. You should include the lien agent contact information in the contract (your contract with the subs) that is signed by the parties to make sure that the subs acknowledge receipt of the information. If you do not list it in the contract, you must show proof of service as discussed below. If you fail to provide this information, you will be liable for any actual damages that the lower tier sub incurs as a result of your failure to give notice. This is set out in NCGS §§ 44A-11.1 and 11.2. You should also make certain that a sign disclosing the contact information for the lien agent be conspicuously posted and continuously posted until construction is completed if the information is not contained in the permit. The permit must also be posted. Your contract with the owner will likely make you responsible for these tasks. These are requirements for private projects. Public projects are a little different and not discussed here.

Service of the notice to lien agent and provision of the lien agent contact information can be made a number of ways as follows:

(1) Certified mail, return receipt requested.
(2) Signature confirmation as provided by the United States Postal Service.
(3) Physical delivery and obtaining a delivery receipt from the lien agent.
(4) Facsimile with a facsimile confirmation.
(5) Depositing with a designated delivery service authorized pursuant to 26 U.S.C. § 7502(f)(2).
(6) Electronic mail, with delivery receipt.
(7) Utilizing an Internet Web site approved for such use by the designated lien agent to transmit to the designated lien agent, with delivery receipt, all information required to notify the lien agent of its designation pursuant to G.S. 44A-11.1 or to provide a notice to the designated lien agent pursuant to this section.

“Delivery receipt” includes an electronic or facsimile confirmation. A return receipt or other receipt showing delivery of the notice to the addressee or written evidence that such notice was delivered by the postal service or other carrier to but not accepted by the addressee shall be prima facie evidence of receipt.