SF 1898

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 05/21/2016 12:06pm

A bill for an act
relating to contracts; regulating building and construction contracts; 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, including payments under subdivision 4. 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. 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.

EFFECTIVE DATE.

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

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) 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 may 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. Nothing in this subdivision is intended to require that retainage be withheld
in any building or construction contract.

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

EFFECTIVE DATE.

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