Maryland 2025 Regular Session

Maryland House Bill HB451 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	hb0451
6	6
7	7	HOUSE BILL 451
8	8	C2, P2 5lr2431
9	9	HB 1097/23 – ECM & HGO
10	10	By: Delegates Lehman, Acevero, Amprey, Bagnall, Boafo, Charkoudian, Edelson ,
11	11	Fair, Foley, D. Jones, Kaufman, J. Long, Pruski, Smith, Toles, Valderrama,
12	12	Vogel, and Wells
13	13	Introduced and read first time: January 16, 2025
14	14	Assigned to: Economic Matters and Health and Government Operations
15	15
16	16	A BILL ENTITLED
17	17
18	18	AN ACT concerning 1
19	19
20	20	State and Private Construction Contracts – Prompt Payment Requirements 2
21	21
22	22	FOR the purpose of requiring a private construction contract to include a provision 3
23	23	requiring the owner to pay the contractor within a certain period of time or, if the 4
24	24	owner withholds all or part of an amount invoiced, to send a certain notification to 5
25	25	the contractor; establishing that amounts unpaid to a contractor accrue interest at a 6
26	26	certain rate; requiring a contract between a contractor and a subcontractor to 7
27	27	perform a portion of a private or State construction contract to include a provision 8
28	28	requiring the contractor to pay the subcontractor within a certain period of time or, 9
29	29	if the contractor withholds all or part of an amount invoiced, to send a certain 10
30	30	notification to the subcontractor; establishing that amounts unpaid to a 11
31	31	subcontractor accrue interest at a certain rate; and generally relating to prompt 12
32	32	payment on construction contracts. 13
33	33
34	34	BY repealing and reenacting, without amendments, 14
35	35	Article – Business Regulation 15
36	36	Section 17–601 16
37	37	Annotated Code of Maryland 17
38	38	(2024 Replacement Volume) 18
39	39
40	40	BY adding to 19
41	41	Article – Business Regulation 20
42	42	Section 17–604 21
43	43	Annotated Code of Maryland 22
44	44	(2024 Replacement Volume) 23
45	45
46	46	BY adding to 24
47	47	Article – State Finance and Procurement 25
48	48	Section 13–228 26 2 HOUSE BILL 451
49	49
50	50
51	51	Annotated Code of Maryland 1
52	52	(2021 Replacement Volume and 2024 Supplement) 2
53	53
54	54	BY repealing and reenacting, without amendments, 3
55	55	Article – State Finance and Procurement 4
56	56	Section 15–103 and 15–104 5
57	57	Annotated Code of Maryland 6
58	58	(2021 Replacement Volume and 2024 Supplement) 7
59	59
60	60	SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 8
61	61	That the Laws of Maryland read as follows: 9
62	62
63	63	Article – Business Regulation 10
64	64
65	65	17–601. 11
66	66
67	67	(a) In this subtitle the following words have the meanings indicated. 12
68	68
69	69	(b) “Construction license” means a license issued by the clerk to do construction 13
70	70	business. 14
71	71
72	72	(c) (1) “Do construction business” means to agree to: 15
73	73
74	74	(i) pave or curb a sidewalk, street, or other public or private 16
75	75	property; 17
76	76
77	77	(ii) excavate earth, rock, or other material for a foundation or other 18
78	78	purpose; or 19
79	79
80	80	(iii) do work on or in a building or other structure that requires the 20
81	81	use of a building material, including: 21
82	82
83	83	1. paint; 22
84	84
85	85	2. stone; 23
86	86
87	87	3. brick; 24
88	88
89	89	4. mortar; 25
90	90
91	91	5. wood; 26
92	92
93	93	6. cement; 27
94	94
95	95	7. structural iron; 28
96	96
97	97	8. structural steel; 29 HOUSE BILL 451 3
98	98
99	99
100	100
101	101	9. sheet iron; 1
102	102
103	103	10. galvanized iron; 2
104	104
105	105	11. metallic piping; 3
106	106
107	107	12. tin; 4
108	108
109	109	13. lead; 5
110	110
111	111	14. electric wiring; or 6
112	112
113	113	15. any other metal. 7
114	114
115	115	(2) “Do construction business” does not include home improvement as 8
116	116	defined in § 8–101 of this article. 9
117	117
118	118	(d) “Nonresident construction license” means a construction license issued by the 10
119	119	clerk to a person who is incorporated or has its principal office in another state. 11
120	120
121	121	17–604. 12
122	122
123	123	(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 13
124	124	INDICATED. 14
125	125
126	126	(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 15
127	127	CONSTRUCTION BUSINES S. 16
128	128
129	129	(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 17
130	130	LICENSE WHO IS PARTY TO A CONSTRUCTION CO NTRACT. 18
131	131
132	132	(4) “OWNER” MEANS A PERSON OR AN ENTITY OTHER THAN A PUBLIC 19
133	133	BODY RESPONSIBLE FOR CONTRACTING . 20
134	134
135	135	(5) “SUBCONTRACTOR ” MEANS A PERSON OTHER THAN A LABORER 21
136	136	OR SUPPLIER OF MATER IALS WHO MAKES AN OR AL OR WRITTEN AGREEM ENT WITH: 22
137	137
138	138	(I) A CONTRACTOR TO PERF ORM ALL O R PART OF A 23
139	139	CONSTRUCTION CONTRAC T; OR 24
140	140
141	141	(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 25
142	142	A SUBCONTRACT TO A C ONSTRUCTION CONTRACT . 26
143	143
144	144	(B) (1) A CONSTRUCTION CONTRAC T SHALL INCLUDE A PR OVISION THAT 27 4 HOUSE BILL 451
145	145
146	146
147	147	REQUIRES THE OWNER T O PAY THE CONTRACTOR WITHIN 60 DAYS OF THE RECEIPT 1
148	148	OF AN INVOICE FOLLOW ING SATISFACTORY COM PLETION OF THE PORTI ON OF THE 2
149	149	WORK FOR WHICH THE C ONTRACTOR HAS INVOIC ED. 3
150	150
151	151	(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 4
152	152	TO REQUIRE AN OWNER TO PAY AMOUNTS INVOI CED THAT ARE SUBJECT TO 5
153	153	WITHHOLDING AS A RES ULT OF THE CONTRACTO R’S NONCOMPLIANCE WITH THE 6
154	154	CONTRACT. 7
155	155
156	156	(3) IF AN OWNER WITHHOLDS ALL OR PART OF AN AM OUNT INVOICED 8
157	157	BY A CONTRACTOR UNDE R PARAGRAPH (1) OF THIS SUBSECTION , THE OWNER SHALL 9
158	158	NOTIFY THE CONTRACTO R IN WRITING AND WIT H REASONABLE SPECIFICITY WITHIN 10
159	159	60 DAYS OF THE RECEIPT OF THE INVOICE OF : 11
160	160
161	161	(I) THE OWNER ’S INTENTION TO WITHH OLD ALL OR PART OF 12
162	162	THE PAYMENT ; AND 13
163	163
164	164	(II) THE REASON FOR THE W ITHHOLDING. 14
165	165
166	166	(4) (I) IF AN OWNER DOES NOT PAY A CONTRACTOR AS REQUIRED 15
167	167	UNDER PARA GRAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E AT THE 16
168	168	RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 17
169	169
170	170	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 18
171	171	AFTER THE OWNER RECE IVES THE INVOICE. 19
172	172
173	173	(5) NOTHING IN THIS SUBSE CTION MAY BE CONSTRUED TO APPLY T O 20
174	174	OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A C ONSTRUCTION 21
175	175	CONTRACT. 22
176	176
177	177	(C) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 23
178	178	TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 24
179	179	PROVISION THAT REQUI RES THE CONTRACTOR TO PAY THE SUBCONTRACTOR 25
180	180	WITHIN: 26
181	181
182	182	(I) 60 DAYS AFTER THE RECEIPT OF AN IN VOICE FOLLOWING 27
183	183	SATISFACTORY COMPLET ION OF THE PORTION O F THE WORK FOR WHICH THE 28
184	184	SUBCONTRACTOR HAS IN VOICED; OR 29
185	185
186	186	(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 30
187	187	CONTRACTOR FOR WORK PERFORMED BY THE SUB CONTRACTOR . 31
188	188
189	189	(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 32 HOUSE BILL 451 5
190	190
191	191
192	192	TO REQUIRE A CONTRAC TOR TO PAY AMOUNTS I NVOICED THAT ARE SUB JECT TO 1
193	193	WITHHOLDING AS A RES ULT OF THE SUBCONTRA CTOR’S NONCOMPLIANCE WITH THE 2
194	194	CONTRACT. 3
195	195
196	196	(3) IF A CONTRACTOR WITHH OLDS ALL OR PART OF AN AMOUNT 4
197	197	INVOICED BY A SUBCON TRACTOR UNDER PARAGR APH (1) OF THIS SUBSECTION , THE 5
198	198	CONTRACTOR SHALL NOT IFY THE SUBCONTRACTO R IN WRITING AND WIT H 6
199	199	REASONABLE SPECIFICI TY WITHIN 60 DAYS AFTER THE RECEIP T OF THE INVOICE 7
200	200	OF: 8
201	201
202	202	(I) THE CONTRACTOR ’S INTENTION TO WITHH OLD ALL OR PART 9
203	203	OF THE PAYMENT ; AND 10
204	204
205	205	(II) THE REASON FOR THE W ITHHOLDING. 11
206	206
207	207	(4) PAYMENT OF A CONTRACT OR BY AN OWNER MAY N OT BE A 12
208	208	REQUIRED CONDITION F OR PAYMENT OF A SUBC ONTRACTOR UNDER PARAGRAPH 13
209	209	(1) OF THIS SUBSECTION U NLESS THE OWNER IS I NSOLVENT OR HAS FILE D FOR 14
210	210	BANKRUPTCY PROTECTIO N UNDER TITLE 11 OF THE UNITED STATES CODE. 15
211	211
212	212	(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRAC TOR AS 16
213	213	REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRUE 17
214	214	AT THE RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 18
215	215
216	216	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 19
217	217	AFTER THE CONTRACTOR RECEIVES THE INVOICE . 20
218	218
219	219	(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 21
220	220	OR PROHIBIT THE INCLUSION OF ANY RET AINAGE PROVISIONS IN A 22
221	221	SUBCONTRACTOR CONTRA CT. 23
222	222
223	223	Article – State Finance and Procurement 24
224	224
225	225	13–228. 25
226	226
227	227	(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 26
228	228	INDICATED. 27
229	229
230	230	(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 28
231	231	CONSTRUCTION BUSINES S. 29
232	232
233	233	(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 30
234	234	LICENSE WHO IS PARTY TO A CONSTRUCTION CO NTRACT. 31 6 HOUSE BILL 451
235	235
236	236
237	237
238	238	(4) “DO CONSTRUCTION BUSIN ESS” HAS THE MEANING STAT ED IN § 1
239	239	17–601 OF THE BUSINESS REGULATION ARTICLE. 2
240	240
241	241	(5) “SUBCONTRACTOR ” MEANS A PERSON OTHER THAN A LABORER 3
242	242	OR SUPPLIER OF MATER IALS WHO MAKES AN OR AL OR WRITTEN AGREEM ENT WITH: 4
243	243
244	244	(I) A CONTRACTOR TO PERF ORM ALL OR PART OF A 5
245	245	CONSTRUCTION CONTRAC T; OR 6
246	246
247	247	(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 7
248	248	A SUBCONTRACT TO A CONSTRUCTION CONTRAC T. 8
249	249
250	250	(B) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 9
251	251	TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 10
252	252	PROVISION THAT REQUI RES THE CONTRACTOR T O PAY THE SUBCONTRAC TOR 11
253	253	WITHIN: 12
254	254
255	255	(I) 60 DAYS AFTER THE RECEIPT O F AN INVOICE FOLLOWI NG 13
256	256	SATISFACTORY COMPLET ION OF THE PORTION O F THE WORK FOR WHICH THE 14
257	257	SUBCONTRACTOR HAS IN VOICED; OR 15
258	258
259	259	(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 16
260	260	CONTRACTOR FOR WORK PERFORMED BY THE SUB CONTRACTOR . 17
261	261
262	262	(2) PARAGRAPH (1) OF THIS SUBSECTION MAY NOT BE CONSTRUED 18
263	263	TO REQUIRE A CONTRAC TOR TO PAY AMOUNTS I NVOICED THAT ARE SUB JECT TO 19
264	264	WITHHOLDING AS A RES ULT OF THE SUBCONTRA CTOR’S NONCOMPLIANCE WITH THE 20
265	265	CONTRACT. 21
266	266
267	267	(3) IF A CONTRACTOR WITHH OLDS ALL OR PART OF AN AMOUNT 22
268	268	INVOICED BY A SUBCONTRACTOR UNDER PARAGRAPH (1) OF THIS SUBSECTION , THE 23
269	269	CONTRACTOR SHALL NOT IFY THE SUBCONTRACTO R IN WRITING AND WIT H 24
270	270	REASONABLE SPECIFICI TY WITHIN 60 DAYS AFTER THE RECEIPT OF THE I NVOICE 25
271	271	OF: 26
272	272
273	273	(I) THE CONTRACTOR ’S INTENTION TO WITHH OLD ALL OR PART 27
274	274	OF THE PAYMENT ; AND 28
275	275
276	276	(II) THE REASON FOR THE W ITHHOLDING. 29
277	277
278	278	(4) PAYMENT OF A CONTRACT OR BY A UNIT MAY NOT BE A REQUIRED 30
279	279	CONDITION FOR PAYMEN T OF A SUBCONTRACTOR UNDER PARAGRAPH (1) OF THIS 31 HOUSE BILL 451 7
280	280
281	281
282	282	SUBSECTION. 1
283	283
284	284	(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRACTOR AS 2
285	285	REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E 3
286	286	AT THE RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 4
287	287
288	288	(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 5
289	289	AFTER THE CONTRACTOR RECEIVES THE INVOICE . 6
290	290
291	291	(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 7
292	292	OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A 8
293	293	SUBCONTRACTOR CONTRA CT. 9
294	294
295	295	15–103. 10
296	296
297	297	It is the policy of the State to make a payment under a procurement contract within 11
298	298	30 days: 12
299	299
300	300	(1) after the day on which the payment becomes due under the 13
301	301	procurement contract; or 14
302	302
303	303	(2) if later, after the day on which the unit receives an invoice. 15
304	304
305	305	15–104. 16
306	306
307	307	(a) Except as provided in § 15–105 of this subtitle, interest shall accrue at the 17
308	308	rate of 9% per annum on any amount that: 18
309	309
310	310	(1) is due and payable by law and under the written procurement contract; 19
311	311	and 20
312	312
313	313	(2) remains unpaid more than 45 days after a unit receives an invoice. 21
314	314
315	315	(b) Interest shall accrue beginning on the 31st day after: 22
316	316
317	317	(1) the day on which payment becomes due under a procurement contract; 23
318	318	or 24
319	319
320	320	(2) if later, the day on which the unit receives an invoice. 25
321	321
322	322	SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26
323	323	October 1, 2025. 27
324	324