1.1                          A bill for an act 
  1.2             relating to commerce; establishing trust accounts for 
  1.3             certain funds received by contractors or 
  1.4             subcontractors for construction labor, services, or 
  1.5             materials; amending Minnesota Statutes 1994, section 
  1.6             514.07. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1994, section 514.07, is 
  1.9   amended to read: 
  1.10     514.07 [PAYMENTS WITHHELD; LIEN WAIVERS; TRUST FUNDS.] 
  1.11     Subdivision 1.  [WITHHOLDING.] The owner may withhold from 
  1.12  the owner's contractor as much of the contract price as may be 
  1.13  necessary to meet the demands of all persons, other than the 
  1.14  contractor, having a lien upon the premises for labor, skill, or 
  1.15  material furnished for the improvement, and for which the 
  1.16  contractor is liable.  The owner may pay and discharge all these 
  1.17  liens and deduct the cost of them from the contract price.  No 
  1.18  owner shall be required to pay the owner's contractor until the 
  1.19  expiration of 120 days from the completion of the improvement, 
  1.20  except to the extent that the contractor furnishes to the owner 
  1.21  waivers of claims for mechanics' liens signed by persons who 
  1.22  furnished labor, skill or material for the improvement and who 
  1.23  have given the notice required by section 514.011, subdivision 
  1.24  2.  The owner, within 15 days after the completion of the 
  1.25  contract, may require any person having a lien hereunder, by 
  1.26  written request therefor, to furnish to the owner an itemized 
  2.1   and verified account of the person's lien claim, the amount of 
  2.2   it, and the person's name and address.  No action or other 
  2.3   proceeding may be commenced for the enforcement of the lien 
  2.4   until ten days after the statement is furnished.  The word 
  2.5   "owner," as used in this section, includes any person interested 
  2.6   in the premises other than as a lienor.  
  2.7      Subd. 2.  [TRUST FUNDS.] For the purposes of determining 
  2.8   the estate of a debtor in bankruptcy, all amounts received by a 
  2.9   contractor or subcontractor in exchange for both:  (1) 
  2.10  construction labor, services, or materials; and (2) a waiver of 
  2.11  a lien or bond claim; 
  2.12  are held in trust for the benefit of any person or entity that 
  2.13  supplied any portion of that construction labor, services, or 
  2.14  materials.  A holder of trust funds under this subdivision need 
  2.15  not segregate those funds nor account for them separately before 
  2.16  payment.  This subdivision creates no other trust or fiduciary 
  2.17  rights or duties. 
  2.18     Sec. 2.  [EFFECTIVE DATE.] 
  2.19     Section 1 is effective the day after final enactment.