Private Construction Contract Payments

The bill prohibits a property owner from withholding from a contractor more than 5% of the price of completed work to ensure the work is satisfactorily completed. The contractor and subcontractors are also prohibited from withholding more than 5% from subcontractors and suppliers. The bill also clarifies that these prohibitions do not apply to other types of contractual conditions made before payment is due.

The contract may require lien waivers to be executed before payment is made.

The bill applies to:

• A contract that has a price of at least $150,000; and
• A subcontract or supply agreement to such a contract.

The bill does not apply to a single contract that governs:

• The building of:
• A single-family dwelling;
• A multifamily dwelling with 4 or fewer family dwelling units; or
• A contract with a public entity.
  (Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)