North Carolina General Statutes Chapter 22C. Payments to Subcontractors § 22C-4. Conditions of payment

Nothing in this Chapter shall prevent the contractor, at the time of application and certification to the owner, from withholding such application and certification to the owner for payment to the subcontractor for:  unsatisfactory job progress;  defective construction not remedied;  disputed work;  third party claims filed or reasonable evidence that claim will be filed;  failure of subcontractor to make timely payments for labor, equipment, and materials;  damage to contractor or another subcontractor;  reasonable evidence that subcontract cannot be completed for the unpaid balance of the subcontract sum;  or a reasonable amount for retainage not to exceed the initial percentage retained by the owner.