An Act Concerning The Release Of Retainage Withheld In Private Construction Contracts.
Impact
If enacted, HB 07074 would significantly alter the payment structure in private construction projects across the state. By establishing a maximum limit on retainage and setting clear deadlines for its release, this bill intends to enhance cash flow for contractors and subcontractors, ultimately fostering a healthier construction business environment. The stipulated timeline demands that all retainage must be paid within thirty days following the issuance of a completion certificate, which is a critical step towards ensuring contractors are compensated promptly for their work.
Summary
House Bill 07074 addresses the release of retainage withheld in private construction contracts, aiming to promote fairness in payment practices within the construction industry. The bill mandates that no construction contract can withhold retainage exceeding five percent of the estimated progress payment for the entirety of the construction project. This change highlights the need for timely payments to contractors, ensuring that they receive their due payments without unnecessary delays after a project reaches completion.
Contention
Despite its intentions, the bill may face opposition from various stakeholders in the construction sector, particularly from project owners and developers concerned about the financial implications of a mandatory retainage limit. Some developers may argue that retainage serves as a security measure against incomplete work or unresolved issues, and thus, state-imposed limitations could make managing large projects more challenging. Balancing contractor protection with project owner interests will be crucial in the legislative discussions surrounding HB 07074.