HF 1056

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 02/09/2010 01:43am

A bill for an act
relating to construction; requiring prompt payment to construction
subcontractors; regulating progress payments and retainages; amending
Minnesota Statutes 2008, section 337.10, subdivisions 3, 4.

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

Section 1.

Minnesota Statutes 2008, 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. 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. deleted text begin This subdivision
does not apply to construction of or improvements to residential real estate as defined in
section 326B.802, subdivision 13, or to construction of or improvements to attached
single-family dwellings, if those dwellings are used for residential purposes and have
fewer than 13 units per structure. deleted text end

Sec. 2.

Minnesota Statutes 2008, 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) Unless the building and construction contract provides otherwise, an owner or
owner's agent may reserve as retainage from any progress payment on a building and
construction contract an amount not to exceed five percent of the payment. 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.

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

deleted text begin (d) This subdivision does not apply to construction of or improvements to residential
real estate, as defined in section 326B.802, subdivision 13, or to construction of or
improvements to attached single-family dwellings, if those dwellings are used for
residential purposes and have fewer than 13 units per structure.
deleted text end