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Are Public Payment Bond Rights Assignable Under NC Law? Maybe.

By Jonathan Massell

Contractors, like other businesses, often find it advantageous to assign their accounts in exchange for some other form of consideration from the assignee.  What is different about a contractor’s accounts, as compared to most other businesses, is that the amounts owed might be secured by payment bonds.

It should not be disputed that a contractor can assign its accounts to a third party so long as the proper procedures are followed.  However, if the accounts relate to a project where the contractor would have a valid claim on a public payment bond, can this right be assigned along with the accounts?  Practically, the ability of a third party purchaser to make a bond claim would make the assignment of accounts more lucrative for the assignee and would provide some bargaining power for the contractor who wants to assign the accounts.  However, once the accounts are assigned and the third party assignee goes to make a claim on the bond and enforce that claim in court, will a court dismiss the action right off the bat for lack of standing of this new claimant?  In North Carolina, maybe.

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