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words in boldface type and underscored are additions.
Regular Session, 2010
SENATE BILL NO. 218
BY SENATOR APPEL
CONTRACTS. Provides relative to security retainage under the Private Works Act.
(8/15/10)
AN ACT1
To enact R.S. 9:4815, relative to the Private Works Act; to provide for the escrow of funds2
due under certain contracts; to provide for the duties of an escrow agent; to provide3
for the release of funds from escrow; and to provide for related matters.4
Be it enacted by the Legislature of Louisiana:5
Section 1. R.S. 9:4815 is hereby enacted to read as follows: 6
ยง4815. Escrow of funds due under contract; procedures7
A. When, under the provisions of this Part, a contract in the amount of8
fifty thousand dollars or more is entered into between an owner and a9
contractor and if in accordance with the terms of such contract funds earned by10
the contractor are withheld as retainage by the owner from periodic payments11
due to the contractor then such funds shall be deposited by the owner into an12
interest bearing escrow account. The provisions of this Section shall not apply13
to a contract for a single family residence.14
B. An escrow account under the provisions of this Section shall be15
located at a qualified financial institution and shall be under the control of an16
escrow agent. The escrow account and escrow agent shall be selected by mutual17 SB NO. 218
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agreement between the owner and the contractor.1
C. Upon completion of the work that is the subject of the contract, the2
funds, including any interest located in the escrow account shall be released3
from escrow under the following conditions:4
(1) If there are no existing claims by the owner, the whole amount shall5
be paid to the contractor within three business days upon receipt by the escrow6
agent of a written release signed by the contractor and the owner.7
(2)(a) Undisputed amounts shall be released by the escrow agent within8
three business days of receipt of a notarized request of the contractor.9
(b) Disputed amounts that are the subject of a judicial proceeding shall10
be released by the escrow agent within three business days of the receipt of a11
final order by the court. Upon receipt of the order of the court, the escrow12
agent shall pay the contractor or owner such amounts as are determined by the13
court.14
(3)(a) Undisputed amounts shall be released by the escrow agent within15
three business days of receipt of a notarized request of the contractor.16
(b) Disputed amounts that are the subject of binding arbitration under17
the contract shall be released by the escrow agent within three business days of18
the receipt of a final order by the arbitrator or arbitrators who have been19
selected by mutual agreement between the owner and the contractor. Upon20
receipt of the order of the arbitrator or arbitrators, the escrow agent shall pay21
the contractor or owner such amounts as are determined by the arbitrator or22
arbitrators under the rules as defined in the contract between the owner and the23
contractor. 24
D. Receipt by the escrow agent of what purports to be a written release25
signed by the contractor and owner, or an order by a court or arbitrator, shall26
be a full release and discharge of the escrow agent for transfer of funds to the27
contractor. Further, the escrow agent shall not be held liable to any party based28
on any claim that the written release is unauthorized, forged, or otherwise29 SB NO. 218
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fraudulent.1
E. The escrow agent holding an escrow account pursuant to the2
provisions of this Section shall have no liability to the owner, contractor, or any3
other person.4
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Camille Sebastien Perry.
DIGEST
Appel (SB 218)
Proposed law provides that when contracts of $50,000 or more under the Private Works Act
are entered into between an owner and a contractor and contract funds earned by the
contractor under the terms of the contract are withheld as retainage by the owner from
periodic payments due to the contractor, such funds are to be deposited into an interest
bearing escrow account and such provisions of proposed law shall not apply to a contract for
a single family residence.
Proposed law requires the escrow account to be located at a financial institution under the
control of an escrow agent, both of which are to be mutually agreed upon by the parties to
the contract.
Proposed law requires funds, including any interest, in the escrow account to be released
upon the completion of the contract as follows:
(1)If there are no existing claims by the owner, the whole amount shall be paid to the
contractor within three business days upon receipt by the escrow agent of a written
release signed by the contractor and the owner.
(2) Undisputed amounts shall be released by the escrow agent within three business days
of receipt of a notarized request of the contractor. Disputed amounts that are the
subject of a judicial proceeding shall be released by the escrow agent within three
business days of the receipt of a final order by the court specifying the amount of
funds to be released.
(3) Undisputed amounts shall be released by the escrow agent within three business days
of receipt of a notarized request of the contractor. Disputed amounts that are the
subject of binding arbitration under the contract shall be released by the escrow agent
within three business days of the receipt of a final order by the arbitrator specifying
such amounts as are determined by the arbitrator or arbitrators under the rules as
defined in the contract.
Proposed law provides that receipt by the escrow agent of what purports to be a written
release signed by the contractor and owner, or an order by a court or arbitrator shall be a full
release and discharge of the escrow agent for transfer of funds to the contractor and the
escrow agent shall not be held liable to any party based on any claim that the written release
is unauthorized, forged, or otherwise fraudulent. Provides that the escrow agent holding an
escrow agent pursuant to proposed law shall have no liability to the owner, contractor, or any
other person.
Effective August 15, 2010.
(Adds R.S. 9:4815) SB NO. 218
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Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Judiciary A to the
original bill.
1. Changes "non-interest" to "interest" bearing account.
2. Provides that funds include any interest.
3. Changes "three days" to "three business days"
4. Provides that undisputed amounts shall be released by the escrow agent
withing three business days of receipt of a notarized request of a contractor.
5. Provides that receipt by the escrow agent of what purports to be a written
release shall be a full release and discharge of liability of the agent.