Private Construction Contract Payments

The act 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 act 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 act applies to:

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

The act 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 this bill as enacted.)