HF 2451

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 05/11/2016 09:16am

A bill for an act
relating to contracts; regulating building and construction contracts; regulating
payments to subcontractors; providing for certain progress payments and
retainages; amending Minnesota Statutes 2014, section 337.10, subdivisions 3, 4.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2014, section 337.10, subdivision 3, is amended to read:

Subd. 3.

Prompt payment to subcontractors.

A building and construction contract
shall be deemed to require the prime contractor and all subcontractors to promptly pay
any subcontractor or material supplier contract within ten days of receipt by the party
responsible for payment of payment for undisputed services provided by the party
requesting payment new text begin , including payments under subdivision 4 new text end . The contract shall be
deemed to require the party responsible for payment to pay interest of 1-1/2 percent per
month to the party requesting payment on any undisputed amount not paid on time. The
minimum monthly interest penalty payment for an unpaid balance of $100 or more is $10.
For an unpaid balance of less than $100, the party responsible for payment shall pay the
actual penalty due to the party requesting payment. A party requesting payment who
prevails in a civil action to collect interest penalties from a party responsible for payment
must be awarded its costs and disbursements, including attorney fees incurred in bringing
the action. new text begin If an undisputed payment is not received within ten days, the prime contractor
or subcontractor of any tier that has not received the undisputed payment may suspend
work under the building and construction contract until the undisputed payment is received.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2016, and applies to
building and construction contracts executed on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2014, section 337.10, subdivision 4, is amended to read:

Subd. 4.

Progress payments and retainages.

(a) Unless the building and
construction contract provides otherwise, the owner or other persons making payments
under the contract must make progress payments monthly as the work progresses.
Payments shall be based upon estimates of work completed as approved by the owner or
the owner's agent. A progress payment shall not be considered acceptance or approval of
any work or waiver of any defects therein.

(b) deleted text begin Unless the building and construction contract provides otherwise, an owner or
owner's agent may reserve as deleted text end Retainage deleted text begin from any progress payment deleted text end on a building and
construction contract deleted text begin an amount deleted text end new text begin may new text end not deleted text begin to deleted text end exceed five percent deleted text begin of the payment deleted text end . An owner
or owner's agent may reduce the amount of retainage and may eliminate retainage on any
monthly contract payment if, in the owner's opinion, the work is progressing satisfactorily. new text begin
Nothing in this subdivision requires that retainage be withheld.
new text end

(c) This subdivision does not apply to contracts for professional services as defined
in sections 326.02 to 326.15.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2016, and applies to
building and construction contracts executed on or after that date.
new text end