| SB 0911 | Allows retainage in private building contracts |
| Sponsor: | Foster | Co-Sponsor(s) | ||
| LR Number: | 3533S.01I | Fiscal Note: | 3533-01 | |
| Committee: | Pensions and General Laws | |||
| Last Action: | 03/13/02 - Voted Do Pass S Pensions & General Laws Committee | Journal page: | ||
| Title: | ||||
| Effective Date: | August 28, 2002 | |||
SB 911 - This act allows owners in private building contracts to retain a portion of payment due to a contractor in order to ensure the proper performance of the contract. Such retainage shall not exceed five percent of the payment due pursuant to the contract or agreement unless the contractor's performance is not in accordance with the contract, in which case the owner may retain additional sums in any amount. Contractors may tender substitute security to an owner, after which the contractor may receive cash payments of retainage already withheld or may avoid withholding of retainage. Subcontractors may likewise tender substitute security to the contractor and either recover or avoid withheld retainage. Acceptable substitute security shall include CDs from a bank within Missouri, a retainage bond, or an irrevocable and unconditional letter of credit from a Missouri bank.
A contractor may not withhold retainage from subcontractor in a percentage greater than their own retainage unless the performance is not in accordance with the subcontract. Upon a release of retainage, contractors are to promptly pay subcontractors their ratable share of the retainage released.
If a subcontractor's performance is satisfactorily completed, the subcontractor may be released prior to substantial completion of the entire project. Within 30 days of reaching substantial completion, all retainage must be released by the owner less 150% of the cost of remaining items to complete. Thereafter the contractor must pay subcontractors within 7 days. Substantial completion is defined as the earlier of the issuance of a certificate of completion; the date an occupancy permit is issued; or the date the owner begins or could have begun use of the project for its intended purpose.
If retainage is withheld wrongfully a court may award interest on the amount at 1 1/2% per month plus attorney's fees. This act will apply to certain contracts entered after August 28, 2002. Agreements formed after August 28, 2002, will be unenforceable to the extent that their provisions conflict with this act.
This act is similar to HB 1403 (2002).
CINDY KADLEC