1.1                          A bill for an act 
  1.2             relating to commerce; regulating contracts for 
  1.3             architects, engineers, surveyors, landscape 
  1.4             architects, geoscientists, and interior designers; 
  1.5             amending Minnesota Statutes 1998, sections 16C.08, 
  1.6             subdivision 5; and 337.10, subdivision 4. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1998, section 16C.08, 
  1.9   subdivision 5, is amended to read: 
  1.10     Subd. 5.  [CONTRACT TERMS.] (a) A professional or technical 
  1.11  services contract must by its terms permit the commissioner to 
  1.12  unilaterally terminate the contract prior to completion, upon 
  1.13  payment of just compensation, if the commissioner determines 
  1.14  that further performance under the contract would not serve 
  1.15  agency purposes. 
  1.16     (b) The terms of a contract must provide that no more than 
  1.17  90 percent of the amount due under the contract may be paid 
  1.18  until the final product has been reviewed by the head of the 
  1.19  agency entering into the contract and the head of the agency has 
  1.20  certified that the contractor has satisfactorily fulfilled the 
  1.21  terms of the contract, unless specifically excluded in writing 
  1.22  by the commissioner.  This paragraph does not apply to contracts 
  1.23  for professional services as defined in sections 326.02 to 
  1.24  326.15. 
  1.25     Sec. 2.  Minnesota Statutes 1998, section 337.10, 
  1.26  subdivision 4, is amended to read: 
  2.1      Subd. 4.  [PROGRESS PAYMENTS AND RETAINAGES.] (a) Unless 
  2.2   the building and construction contract provides otherwise, the 
  2.3   owner or other persons making payments under the contract must 
  2.4   make progress payments monthly as the work progresses.  Payments 
  2.5   shall be based upon estimates of work completed as approved by 
  2.6   the owner or the owner's agent.  A progress payment shall not be 
  2.7   considered acceptance or approval of any work or waiver of any 
  2.8   defects therein. 
  2.9      (b) Unless the building and construction contract provides 
  2.10  otherwise, an owner or owner's agent may reserve as retainage 
  2.11  from any progress payment on a building and construction 
  2.12  contract an amount not to exceed five percent of the payment.  
  2.13  An owner or owner's agent may reduce the amount of retainage and 
  2.14  may eliminate retainage on any monthly contract payment if, in 
  2.15  the owner's opinion, the work is progressing satisfactorily.  
  2.16     (c) This subdivision does not apply to contracts for 
  2.17  professional services as defined in sections 326.02 to 326.15. 
  2.18     (d) This subdivision does not apply to construction of or 
  2.19  improvements to residential real estate, as defined in section 
  2.20  326.83, subdivision 17, or to construction of or improvements to 
  2.21  attached single-family dwellings, if those dwellings are used 
  2.22  for residential purposes and have fewer than 13 units per 
  2.23  structure.