HF 878

1st Engrossment - 91st Legislature (2019 - 2020) Posted on 03/11/2019 05:09pm

A bill for an act
relating to contracts; modifying retainage requirements for building and construction
contracts; amending Minnesota Statutes 2018, section 337.10, subdivisions 4, 5.

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

Section 1.

Minnesota Statutes 2018, 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) Retainage on a building and construction contract may not exceed five percent. 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) The maximum retainage percentage a prime contractor may withhold from
subcontractors in a building and construction contract is the retainage percentage withheld
by the public agency or owner from the prime contractor. This paragraph also applies to
subcontractors who may have building and construction contracts with other subcontractors.

(d) Withholding retainage for warranties or warranty work is prohibited.

(e) Retainage must be released within 30 days of the completed improvement date. For
purposes of this paragraph, the completed improvement date is the last day of work or the
last day an item of skill, material, or machinery is provided, whichever occurs first.

(f) A prime contractor must include the name, address, and telephone number of the
responsible agent in any building and construction contract with a subcontractor. Upon
written request of a subcontractor, the responsible agent must notify the requesting
subcontractor when a progress payment, retainage payment, or final payment has been made
to the prime contractor.

(g) Any dispute regarding retainage payment, incomplete work, or defective work must
be documented. Documentation created under this paragraph must be provided to parties
with whom there is a building and construction contract.

(c) (h) Paragraphs (c) to (g) apply to all contracts governed by sections 15.71 to 15.74.
This subdivision does not apply to contracts for professional services as defined in sections
326.02 to 326.15.

Sec. 2.

Minnesota Statutes 2018, section 337.10, subdivision 5, is amended to read:

Subd. 5.

Definition.

(a) For the purpose purposes of this section, the terms in this
subdivision have the meanings given them.

(b) "Building and construction contract" has the meaning given the term in section
337.01.

(c) "Responsible agent" means the public contracting agency's representative, the owner's
authorized agent, or the person who entered into a contract with the prime contractor.