EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0451*
HOUSE BILL 451
C2, P2 5lr2431
HB 1097/23 – ECM & HGO
By: Delegates Lehman, Acevero, Amprey, Bagnall, Boafo, Charkoudian, Edelson ,
Fair, Foley, D. Jones, Kaufman, J. Long, Pruski, Smith, Toles, Valderrama,
Vogel, and Wells
Introduced and read first time: January 16, 2025
Assigned to: Economic Matters and Health and Government Operations
A BILL ENTITLED
AN ACT concerning 1
State and Private Construction Contracts – Prompt Payment Requirements 2
FOR the purpose of requiring a private construction contract to include a provision 3
requiring the owner to pay the contractor within a certain period of time or, if the 4
owner withholds all or part of an amount invoiced, to send a certain notification to 5
the contractor; establishing that amounts unpaid to a contractor accrue interest at a 6
certain rate; requiring a contract between a contractor and a subcontractor to 7
perform a portion of a private or State construction contract to include a provision 8
requiring the contractor to pay the subcontractor within a certain period of time or, 9
if the contractor withholds all or part of an amount invoiced, to send a certain 10
notification to the subcontractor; establishing that amounts unpaid to a 11
subcontractor accrue interest at a certain rate; and generally relating to prompt 12
payment on construction contracts. 13
BY repealing and reenacting, without amendments, 14
Article – Business Regulation 15
Section 17–601 16
Annotated Code of Maryland 17
(2024 Replacement Volume) 18
BY adding to 19
Article – Business Regulation 20
Section 17–604 21
Annotated Code of Maryland 22
(2024 Replacement Volume) 23
BY adding to 24
Article – State Finance and Procurement 25
Section 13–228 26 2 HOUSE BILL 451
Annotated Code of Maryland 1
(2021 Replacement Volume and 2024 Supplement) 2
BY repealing and reenacting, without amendments, 3
Article – State Finance and Procurement 4
Section 15–103 and 15–104 5
Annotated Code of Maryland 6
(2021 Replacement Volume and 2024 Supplement) 7
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 8
That the Laws of Maryland read as follows: 9
Article – Business Regulation 10
17–601. 11
(a) In this subtitle the following words have the meanings indicated. 12
(b) “Construction license” means a license issued by the clerk to do construction 13
business. 14
(c) (1) “Do construction business” means to agree to: 15
(i) pave or curb a sidewalk, street, or other public or private 16
property; 17
(ii) excavate earth, rock, or other material for a foundation or other 18
purpose; or 19
(iii) do work on or in a building or other structure that requires the 20
use of a building material, including: 21
1. paint; 22
2. stone; 23
3. brick; 24
4. mortar; 25
5. wood; 26
6. cement; 27
7. structural iron; 28
8. structural steel; 29 HOUSE BILL 451 3
9. sheet iron; 1
10. galvanized iron; 2
11. metallic piping; 3
12. tin; 4
13. lead; 5
14. electric wiring; or 6
15. any other metal. 7
(2) “Do construction business” does not include home improvement as 8
defined in § 8–101 of this article. 9
(d) “Nonresident construction license” means a construction license issued by the 10
clerk to a person who is incorporated or has its principal office in another state. 11
17–604. 12
(A) (1) IN THIS SECTION THE FOLLOWING WORDS HAVE THE MEANINGS 13
INDICATED. 14
(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 15
CONSTRUCTION BUSINES S. 16
(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 17
LICENSE WHO IS PARTY TO A CONSTRUCTION CO NTRACT. 18
(4) “OWNER” MEANS A PERSON OR AN ENTITY OTHER THAN A PUBLIC 19
BODY RESPONSIBLE FOR CONTRACTING . 20
(5) “SUBCONTRACTOR ” MEANS A PERSON OTHER THAN A LABORER 21
OR SUPPLIER OF MATER IALS WHO MAKES AN OR AL OR WRITTEN AGREEM ENT WITH: 22
(I) A CONTRACTOR TO PERF ORM ALL O R PART OF A 23
CONSTRUCTION CONTRAC T; OR 24
(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 25
A SUBCONTRACT TO A C ONSTRUCTION CONTRACT . 26
(B) (1) A CONSTRUCTION CONTRAC T SHALL INCLUDE A PR OVISION THAT 27 4 HOUSE BILL 451
REQUIRES THE OWNER T O PAY THE CONTRACTOR WITHIN 60 DAYS OF THE RECEIPT 1
OF AN INVOICE FOLLOW ING SATISFACTORY COM PLETION OF THE PORTI ON OF THE 2
WORK FOR WHICH THE C ONTRACTOR HAS INVOIC ED. 3
(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 4
TO REQUIRE AN OWNER TO PAY AMOUNTS INVOI CED THAT ARE SUBJECT TO 5
WITHHOLDING AS A RES ULT OF THE CONTRACTO R’S NONCOMPLIANCE WITH THE 6
CONTRACT. 7
(3) IF AN OWNER WITHHOLDS ALL OR PART OF AN AM OUNT INVOICED 8
BY A CONTRACTOR UNDE R PARAGRAPH (1) OF THIS SUBSECTION , THE OWNER SHALL 9
NOTIFY THE CONTRACTO R IN WRITING AND WIT H REASONABLE SPECIFICITY WITHIN 10
60 DAYS OF THE RECEIPT OF THE INVOICE OF : 11
(I) THE OWNER ’S INTENTION TO WITHH OLD ALL OR PART OF 12
THE PAYMENT ; AND 13
(II) THE REASON FOR THE W ITHHOLDING. 14
(4) (I) IF AN OWNER DOES NOT PAY A CONTRACTOR AS REQUIRED 15
UNDER PARA GRAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E AT THE 16
RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 17
(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 18
AFTER THE OWNER RECE IVES THE INVOICE. 19
(5) NOTHING IN THIS SUBSE CTION MAY BE CONSTRUED TO APPLY T O 20
OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A C ONSTRUCTION 21
CONTRACT. 22
(C) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 23
TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 24
PROVISION THAT REQUI RES THE CONTRACTOR TO PAY THE SUBCONTRACTOR 25
WITHIN: 26
(I) 60 DAYS AFTER THE RECEIPT OF AN IN VOICE FOLLOWING 27
SATISFACTORY COMPLET ION OF THE PORTION O F THE WORK FOR WHICH THE 28
SUBCONTRACTOR HAS IN VOICED; OR 29
(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 30
CONTRACTOR FOR WORK PERFORMED BY THE SUB CONTRACTOR . 31
(2) PARAGRAPH (1) OF THIS SUBSECTION M AY NOT BE CONSTRUED 32 HOUSE BILL 451 5
TO REQUIRE A CONTRAC TOR TO PAY AMOUNTS I NVOICED THAT ARE SUB JECT TO 1
WITHHOLDING AS A RES ULT OF THE SUBCONTRA CTOR’S NONCOMPLIANCE WITH THE 2
CONTRACT. 3
(3) IF A CONTRACTOR WITHH OLDS ALL OR PART OF AN AMOUNT 4
INVOICED BY A SUBCON TRACTOR UNDER PARAGR APH (1) OF THIS SUBSECTION , THE 5
CONTRACTOR SHALL NOT IFY THE SUBCONTRACTO R IN WRITING AND WIT H 6
REASONABLE SPECIFICI TY WITHIN 60 DAYS AFTER THE RECEIP T OF THE INVOICE 7
OF: 8
(I) THE CONTRACTOR ’S INTENTION TO WITHH OLD ALL OR PART 9
OF THE PAYMENT ; AND 10
(II) THE REASON FOR THE W ITHHOLDING. 11
(4) PAYMENT OF A CONTRACT OR BY AN OWNER MAY N OT BE A 12
REQUIRED CONDITION F OR PAYMENT OF A SUBC ONTRACTOR UNDER PARAGRAPH 13
(1) OF THIS SUBSECTION U NLESS THE OWNER IS I NSOLVENT OR HAS FILE D FOR 14
BANKRUPTCY PROTECTIO N UNDER TITLE 11 OF THE UNITED STATES CODE. 15
(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRAC TOR AS 16
REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRUE 17
AT THE RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 18
(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 19
AFTER THE CONTRACTOR RECEIVES THE INVOICE . 20
(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 21
OR PROHIBIT THE INCLUSION OF ANY RET AINAGE PROVISIONS IN A 22
SUBCONTRACTOR CONTRA CT. 23
Article – State Finance and Procurement 24
13–228. 25
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 26
INDICATED. 27
(2) “CONSTRUCTION CONTRACT ” MEANS A CONTRACT TO DO 28
CONSTRUCTION BUSINES S. 29
(3) “CONTRACTOR ” MEANS THE HOLDER OF A CONSTRUCTION 30
LICENSE WHO IS PARTY TO A CONSTRUCTION CO NTRACT. 31 6 HOUSE BILL 451
(4) “DO CONSTRUCTION BUSIN ESS” HAS THE MEANING STAT ED IN § 1
17–601 OF THE BUSINESS REGULATION ARTICLE. 2
(5) “SUBCONTRACTOR ” MEANS A PERSON OTHER THAN A LABORER 3
OR SUPPLIER OF MATER IALS WHO MAKES AN OR AL OR WRITTEN AGREEM ENT WITH: 4
(I) A CONTRACTOR TO PERF ORM ALL OR PART OF A 5
CONSTRUCTION CONTRAC T; OR 6
(II) ANOTHER SUBCONTRACTO R TO PERFORM ALL OR PART OF 7
A SUBCONTRACT TO A CONSTRUCTION CONTRAC T. 8
(B) (1) A CONTRACT BETWEEN A C ONTRACTOR AND A SUBC ONTRACTOR 9
TO PERFORM A PORTION OF A CONSTRUCTION CO NTRACT SHALL INCLUDE A 10
PROVISION THAT REQUI RES THE CONTRACTOR T O PAY THE SUBCONTRAC TOR 11
WITHIN: 12
(I) 60 DAYS AFTER THE RECEIPT O F AN INVOICE FOLLOWI NG 13
SATISFACTORY COMPLET ION OF THE PORTION O F THE WORK FOR WHICH THE 14
SUBCONTRACTOR HAS IN VOICED; OR 15
(II) 7 DAYS AFTER RECEIPT O F PAYMENT BY THE OWN ER TO THE 16
CONTRACTOR FOR WORK PERFORMED BY THE SUB CONTRACTOR . 17
(2) PARAGRAPH (1) OF THIS SUBSECTION MAY NOT BE CONSTRUED 18
TO REQUIRE A CONTRAC TOR TO PAY AMOUNTS I NVOICED THAT ARE SUB JECT TO 19
WITHHOLDING AS A RES ULT OF THE SUBCONTRA CTOR’S NONCOMPLIANCE WITH THE 20
CONTRACT. 21
(3) IF A CONTRACTOR WITHH OLDS ALL OR PART OF AN AMOUNT 22
INVOICED BY A SUBCONTRACTOR UNDER PARAGRAPH (1) OF THIS SUBSECTION , THE 23
CONTRACTOR SHALL NOT IFY THE SUBCONTRACTO R IN WRITING AND WIT H 24
REASONABLE SPECIFICI TY WITHIN 60 DAYS AFTER THE RECEIPT OF THE I NVOICE 25
OF: 26
(I) THE CONTRACTOR ’S INTENTION TO WITHH OLD ALL OR PART 27
OF THE PAYMENT ; AND 28
(II) THE REASON FOR THE W ITHHOLDING. 29
(4) PAYMENT OF A CONTRACT OR BY A UNIT MAY NOT BE A REQUIRED 30
CONDITION FOR PAYMEN T OF A SUBCONTRACTOR UNDER PARAGRAPH (1) OF THIS 31 HOUSE BILL 451 7
SUBSECTION. 1
(5) (I) IF A CONTRACTOR DOES NOT PAY A SUBCONTRACTOR AS 2
REQUIRED UNDER PARAG RAPH (1) OF THIS SUBSECTION , INTEREST SHALL ACCRU E 3
AT THE RATE OF 9% A YEAR ON ANY AMOUNT THAT R EMAINS UNPAID . 4
(II) INTEREST SHALL ACCRUE BEGINNING ON THE 60TH DAY 5
AFTER THE CONTRACTOR RECEIVES THE INVOICE . 6
(6) NOTHING IN THIS SUBSE CTION MAY BE CONSTRU ED TO APPLY TO 7
OR PROHIBIT THE INCL USION OF ANY RETAINA GE PROVISIONS IN A 8
SUBCONTRACTOR CONTRA CT. 9
15–103. 10
It is the policy of the State to make a payment under a procurement contract within 11
30 days: 12
(1) after the day on which the payment becomes due under the 13
procurement contract; or 14
(2) if later, after the day on which the unit receives an invoice. 15
15–104. 16
(a) Except as provided in § 15–105 of this subtitle, interest shall accrue at the 17
rate of 9% per annum on any amount that: 18
(1) is due and payable by law and under the written procurement contract; 19
and 20
(2) remains unpaid more than 45 days after a unit receives an invoice. 21
(b) Interest shall accrue beginning on the 31st day after: 22
(1) the day on which payment becomes due under a procurement contract; 23
or 24
(2) if later, the day on which the unit receives an invoice. 25
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 26
October 1, 2025. 27