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Key: (1) language to be deleted (2) new language

                            CHAPTER 116-S.F.No. 1368 
                  An act relating to commerce; regulating contracts for 
                  architects, engineers, surveyors, landscape 
                  architects, geoscientists, and interior designers; 
                  amending Minnesota Statutes 1998, sections 16C.08, 
                  subdivision 5; and 337.10, subdivision 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 16C.08, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CONTRACT TERMS.] (a) A professional or technical 
        services contract must by its terms permit the commissioner to 
        unilaterally terminate the contract prior to completion, upon 
        payment of just compensation, if the commissioner determines 
        that further performance under the contract would not serve 
        agency purposes. 
           (b) The terms of a contract must provide that no more than 
        90 percent of the amount due under the contract may be paid 
        until the final product has been reviewed by the head of the 
        agency entering into the contract and the head of the agency has 
        certified that the contractor has satisfactorily fulfilled the 
        terms of the contract, unless specifically excluded in writing 
        by the commissioner.  This paragraph does not apply to contracts 
        for professional services as defined in sections 326.02 to 
        326.15. 
           Sec. 2.  Minnesota Statutes 1998, 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. 
           (d) This subdivision does not apply to construction of or 
        improvements to residential real estate, as defined in section 
        326.83, subdivision 17, 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. 
           Presented to the governor April 29, 1999 
           Signed by the governor May 3, 1999, 1:58 p.m.