Maryland 2023 Regular Session

Maryland Senate Bill SB453 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2
3	3	EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
4	4	[Brackets] indicate matter deleted from existing law.
5	5	sb0453
6	6
7	7	SENATE BILL 453
8	8	C2, P2 3lr1520
9	9	CF 3lr2098
10	10	By: Senators Kramer, Gile, Jackson, Rosapepe, Salling, Watson, and West
11	11	Introduced and read first time: February 2, 2023
12	12	Assigned to: Finance
13	13
14	14	A BILL ENTITLED
15	15
16	16	AN ACT concerning 1
17	17
18	18	State and Private Construction Contracts – Prompt Payment Requirements 2
19	19
20	20	FOR the purpose of requiring a private construction contract to include a provision 3
21	21	requiring the owner to pay the contractor within a certain period of time or, if the 4
22	22	owner withholds all or part of an amount invoiced, to send a certain notification to 5
23	23	the contractor; establishing that amounts unpaid to a contractor accrue interest at a 6
24	24	certain rate; requiring a contract between a contractor and a subcontractor to 7
25	25	perform a portion of a private or State construction contract to include a provision 8
26	26	requiring the contractor to pay the subcontractor within a certain period of time or, 9
27	27	if the contractor withholds all or part of an amount invoiced, to send a certain 10
28	28	notification to the subcontractor; establishing that amounts unpaid to a 11
29	29	subcontractor accrue interest at a certain rate; and generally relating to prompt 12
30	30	payment on construction contracts. 13
31	31
32	32	BY repealing and reenacting, without amendments, 14
33	33	Article – Business Regulation 15
34	34	Section 17–601 16
35	35	Annotated Code of Maryland 17
36	36	(2015 Replacement Volume and 2022 Supplement) 18
37	37
38	38	BY adding to 19
39	39	Article – Business Regulation 20
40	40	Section 17–604 21
41	41	Annotated Code of Maryland 22
42	42	(2015 Replacement Volume and 2022 Supplement) 23
43	43
44	44	BY adding to 24
45	45	Article – State Finance and Procurement 25
46	46	Section 13–228 26
47	47	Annotated Code of Maryland 27
48	48	(2021 Replacement Volume and 2022 Supplement) 28 2 SENATE BILL 453
49	49
50	50
51	51
52	52	BY repealing and reenacting, without amendments, 1
53	53	Article – State Finance and Procurement 2
54	54	Section 15–103 and 15–104 3
55	55	Annotated Code of Maryland 4
56	56	(2021 Replacement Volume and 2022 Supplement) 5
57	57
58	58	SECTION 1. BE IT ENACTED BY THE GENERAL AS SEMBLY OF MARYLAND, 6
59	59	That the Laws of Maryland read as follows: 7
60	60
61	61	Article – Business Regulation 8
62	62
63	63	17–601. 9
64	64
65	65	(a) In this subtitle the following words have the meanings indicated. 10
66	66
67	67	(b) “Construction license” means a license issued by the clerk to do construction 11
68	68	business. 12
69	69
70	70	(c) (1) “Do construction business” means to agree to: 13
71	71
72	72	(i) pave or curb a sidewalk, street, or other public or private 14
73	73	property; 15
74	74
75	75	(ii) excavate earth, rock, or other material for a foundation or other 16
76	76	purpose; or 17
77	77
78	78	(iii) do work on or in a building or other structure that requires the 18
79	79	use of a building material, including: 19
80	80
81	81	1. paint; 20
82	82
83	83	2. stone; 21
84	84
85	85	3. brick; 22
86	86
87	87	4. mortar; 23
88	88
89	89	5. wood; 24
90	90
91	91	6. cement; 25
92	92
93	93	7. structural iron; 26
94	94
95	95	8. structural steel; 27
96	96
97	97	9. sheet iron; 28 SENATE BILL 453 3
98	98
99	99
100	100
101	101	10. galvanized iron; 1
102	102
103	103	11. metallic piping; 2
104	104
105	105	12. tin; 3
106	106
107	107	13. lead; 4
108	108
109	109	14. electric wiring; or 5
110	110
111	111	15. any other metal. 6
112	112
113	113	(2) “Do construction business” does not include home improvement as 7
114	114	defined in § 8–101 of this article. 8
115	115
116	116	(d) “Nonresident construction license” means a construction license issued by the 9
117	117	clerk to a person who is incorporated or has its principal office in another state. 10
118	118
119	119	17–604. 11
120	120
121	121	(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 12
122	122	INDICATED. 13
123	123
124	124	(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 14
125	125	CONSTRUCTION BUSINES S. 15
126	126
127	127	(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 16
128	128	LICENSE WHO IS PARTY TO A CO NSTRUCTION CONTRACT . 17
129	129
130	130	(4) “OWNER” MEANS A PERSON OR EN TITY, OTHER THAN A PUBLIC 18
131	131	BODY, RESPONSIB LE FOR CONTRACTING . 19
132	132
133	133	(5) “SUBCONTRACTOR ” MEANS A PERSON, OTHER THAN A LABORER 20
134	134	OR SUPPLIER OF MATER IALS, WHO MAKES AN ORAL OR WRITTEN AGREEMENT WI TH: 21
135	135
136	136	(I) A CONTRACTOR TO PERF ORM ALL OR PART OF A 22
137	137	CONSTRUCTION CONTRAC T; OR 23
138	138
139	139	(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 24
140	140	A SUBCONTRACT TO A CONSTRUCTION CONTRACT. 25
141	141
142	142	(B) (1) A CONSTRUCTION CONTRAC T SHALL INCLUDE A PR OVISION THAT 26
143	143	REQUIRES THE OWNER T O PAY THE CONTRACTOR WITHIN 60 DAYS OF THE RECEIPT 27 4 SENATE BILL 453
144	144
145	145
146	146	OF AN INVOICE FOLLOW ING SATISFACTORY COMPLETION OF THE PORTION OF THE 1
147	147	WORK FOR WHICH THE C ONTRACTOR HAS INVOIC ED. 2
148	148
149	149	(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 3
150	150	TO REQUIRE AN OWNER TO PAY AMOUNTS INVOI CED THAT ARE SUBJECT TO 4
151	151	WITHHOLDING AS A RESULT OF THE C ONTRACTOR ’S NONCOMPLIANCE WITH THE 5
152	152	CONTRACT. 6
153	153
154	154	(3) IF AN OWNER WITHHOLDS ALL OR PAR T OF AN AMOUNT INVOI CED 7
155	155	BY A CONTRACTOR UNDE R PARAGRAPH (1) OF THIS SUBSECTION , THE OWNER SHALL 8
156	156	NOTIFY THE CONTRACTO R IN WRITING AND WIT H REASONABLE SPECIFI CITY WITHIN 9
157	157	60 DAYS OF THE RECEIPT OF THE INVOICE OF: 10
158	158
159	159	(I) THE OWNER ’S INTENTION TO WITHH OLD ALL OR PART OF 11
160	160	THE PAYMENT ; AND 12
161	161
162	162	(II) THE REASON FOR THE W ITHHOLDING. 13
163	163
164	164	(4) (I) IF AN OWNER DOES NOT PAY A CONTRACTOR AS REQUIRED 14
165	165	UNDER PARAGRAPH (1) OF THIS SUBSECTION , INTEREST SH ALL ACCRUE AT THE 15
166	166	RATE OF 9% PER ANNUM ON ANY AMO UNT THAT REMAINS UNP AID. 16
167	167
168	168	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 17
169	169	AFTER THE OWNER RECE IVES THE INVOICE. 18
170	170
171	171	(5) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 19
172	172	OR PROHIBIT THE INCLUSION OF ANY RET AINAGE PROVISIONS IN A CONSTRUCTION 20
173	173	CONTRACT. 21
174	174
175	175	(C) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 22
176	176	TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 23
177	177	PROVISION THAT REQUI RES THE CONTRACTOR T O PAY THE SUBCONTRAC TOR 24
178	178	WITHIN: 25
179	179
180	180	(I) 60 DAYS OF THE RECEIPT OF AN INVOIC E FOLLOWING 26
181	181	SATISFACTORY COMPLETION OF THE PO RTION OF THE WORK FO R WHICH THE 27
182	182	SUBCONTRACTOR HAS INVOI CED; OR 28
183	183
184	184	(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 29
185	185	CONTRACTOR FOR WORK PERFORMED BY THE SUBCONTRACTOR . 30
186	186
187	187	(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 31
188	188	TO REQUIRE A CONTRACTOR TO PAY AMOUNTS INVOI CED THAT ARE SUBJECT TO 32 SENATE BILL 453 5
189	189
190	190
191	191	WITHHOLDING AS A RES ULT OF THE SUBCONTRACTOR ’S NONCOMPLIANCE WITH THE 1
192	192	CONTRACT. 2
193	193
194	194	(3) IF A CONTRACTOR WITHHOLDS ALL OR PART OF A N AMOUNT 3
195	195	INVOICED BY A SUBCONTRACTOR UNDER PAR AGRAPH (1) OF THIS SUBSECTION , THE 4
196	196	CONTRACTOR SHALL NOTIFY THE SUBCONTRACTOR IN WRITIN G AND WITH 5
197	197	REASONABLE SPECIFICI TY WITHIN 60 DAYS OF THE REC EIPT OF THE INVOICE OF : 6
198	198
199	199	(I) THE CONTRACTOR ’S INTENTION TO WITHHOL D ALL OR PART 7
200	200	OF THE PAYMENT ; AND 8
201	201
202	202	(II) THE REASON FOR THE W ITHHOLDING. 9
203	203
204	204	(4) PAYMENT OF A CONTRACT OR BY AN OWNER MAY N OT BE A 10
205	205	REQUIRED CONDITION F OR PAYMENT OF A SUBC ONTRACTOR UNDER PARAGRAPH 11
206	206	(1) OF THIS SUBSECTION UNLESS THE OWNER IS I NSOLVENT OR HAS FILED FOR 12
207	207	BANKRUPTCY PROTECTION UNDER TITLE 11 OF THE UNITED STATES CODE. 13
208	208
209	209	(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRACTOR AS 14
210	210	REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E 15
211	211	AT THE RATE OF 9% PER ANNUM ON ANY AMO UNT THAT REMAINS UNP AID. 16
212	212
213	213	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 17
214	214	AFTER THE CONTRACTOR RECEIVES THE INVOICE . 18
215	215
216	216	(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 19
217	217	OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A 20
218	218	SUBCONTRACTOR CONTRACT. 21
219	219
220	220	Article – State Finance and Procurement 22
221	221
222	222	13–228. 23
223	223
224	224	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 24
225	225	INDICATED. 25
226	226
227	227	(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 26
228	228	CONSTRUCTION BUSINES S. 27
229	229
230	230	(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 28
231	231	LICENSE WHO IS PARTY TO A CONSTRUCTION CO NTRACT. 29
232	232	6 SENATE BILL 453
233	233
234	234
235	235	(4) “DO CONSTRUCTION BUSIN ESS” HAS THE MEANING STAT ED IN § 1
236	236	17–601 OF THE BUSINESS REGULATION ARTICLE. 2
237	237
238	238	(5) “SUBCONTRACTOR ” MEANS A PERSON, OTHER THAN A LABORER 3
239	239	OR SUPPLIER OF MATER IALS, WHO MAKES AN ORAL OR WRITTEN AGREEMENT WI TH: 4
240	240
241	241	(I) A CONTRACTOR TO PERF ORM ALL OR PART OF A 5
242	242	CONSTRUCTION CONTRAC T; OR 6
243	243
244	244	(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 7
245	245	A SUBCONTRACT TO A C ONSTRUCTION CONTRACT . 8
246	246
247	247	(B) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 9
248	248	TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 10
249	249	PROVISION THAT REQUI RES THE CONTRACTOR T O PAY THE SUBCONTRAC TOR 11
250	250	WITHIN: 12
251	251
252	252	(I) 60 DAYS OF THE RECEIPT OF AN INVOICE FOLLOW ING 13
253	253	SATISFACTORY COMPLETION OF THE PORTION OF THE W ORK FOR WHICH THE 14
254	254	SUBCONTRACTOR HAS IN VOICED; OR 15
255	255
256	256	(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 16
257	257	CONTRACTOR FOR WORK PERFORMED BY THE SUB CONTRACTOR . 17
258	258
259	259	(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 18
260	260	TO REQUIRE A CONTRAC TOR TO PAY AMOUNTS I NVOICED THAT ARE SUB JECT TO 19
261	261	WITHHOLDING AS A RES ULT OF THE SUBCONTRA CTOR’S NONCOMPLIANCE WITH THE 20
262	262	CONTRACT. 21
263	263
264	264	(3) IF A CONTRACTOR WITHH OLDS ALL OR PART OF AN AMOUNT 22
265	265	INVOICED BY A SUBCON TRACTOR UNDER PARAGR APH (1) OF THIS SUBSECTION , THE 23
266	266	CONTRACTOR SHALL NOT IFY THE SUBCONTRACTO R IN WRITING AND WIT H 24
267	267	REASONABLE SPECIFICI TY WITHIN 60 DAYS OF THE REC EIPT OF THE INVOICE OF : 25
268	268
269	269	(I) THE CONTRACTOR ’S INTENTION TO WITHH OLD ALL OR PART 26
270	270	OF THE PAYMENT ; AND 27
271	271
272	272	(II) THE REASON FOR THE W ITHHOLDING. 28
273	273
274	274	(4) PAYMENT OF A CONTRACT OR BY A UNIT MAY NOT BE A REQUIRE D 29
275	275	CONDITION FOR PAYMEN T OF A SUBCONTRACTOR UNDER PARAGRAPH (1) OF THIS 30
276	276	SUBSECTION. 31
277	277	SENATE BILL 453 7
278	278
279	279
280	280	(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRAC TOR AS 1
281	281	REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E 2
282	282	AT THE RATE OF 9% PER ANNUM ON ANY AMO UNT THAT REMAINS UNP AID. 3
283	283
284	284	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 4
285	285	AFTER THE CONTRACTOR RECEIVES THE INVOICE . 5
286	286
287	287	(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRUED TO APPLY T O 6
288	288	OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A 7
289	289	SUBCONTRACTOR CONTRA CT. 8
290	290
291	291	15–103. 9
292	292
293	293	It is the policy of the State to make a payment under a procurement contract within 10
294	294	30 days: 11
295	295
296	296	(1) after the day on which the payment becom es due under the 12
297	297	procurement contract; or 13
298	298
299	299	(2) if later, after the day on which the unit receives an invoice. 14
300	300
301	301	15–104. 15
302	302
303	303	(a) Except as provided in § 15–105 of this subtitle, interest shall accrue at the 16
304	304	rate of 9% per annum on any amount that: 17
305	305
306	306	(1) is due and payable by law and under the written procurement contract; 18
307	307	and 19
308	308
309	309	(2) remains unpaid more than 45 days after a unit receives an invoice. 20
310	310
311	311	(b) Interest shall accrue beginning on the 31st day after: 21
312	312
313	313	(1) the day on which payment becomes due under a procurement contract; 22
314	314	or 23
315	315
316	316	(2) if later, the day on which the unit receives an invoice. 24
317	317
318	318	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 25
319	319	October 1, 2023. 26