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337.10 BUILDING AND CONSTRUCTION CONTRACTS; PROHIBITED PROVISIONS.
    Subdivision 1. Application of laws of another state. Provisions contained in, or executed in
connection with, a building and construction contract to be performed in Minnesota making the
contract subject to the laws of another state or requiring that any litigation, arbitration, or other
dispute resolution process on the contract occur in another state are void and unenforceable.
    Subd. 2. Waiver of lien or claim. Provisions contained in, or executed in connection with, a
building and construction contract requiring a contractor, subcontractor, or material supplier to
waive the right to a mechanics lien or to a claim against a payment bond before the person has
been paid for the labor or materials or both that the person furnished are void and unenforceable.
This provision shall not affect the validity of a waiver as to any third party who detrimentally
relies upon the waiver.
    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. 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.
    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.
    Subd. 5. Definition. For the purpose of this section, "building and construction contract" has
the meaning given the term in section 337.01.
History: 1997 c 127 s 1; 1998 c 289 s 1,2; 1999 c 116 s 2

Official Publication of the State of Minnesota
Revisor of Statutes