Michigan House Bill HB4837

Michigan 2023-2024 Regular Session

• Introduced: 6/22/23
• Refer: 6/22/23

Caption

Construction: contracts; prompt payment law; establish for contractors to pay subcontractors and suppliers in a timely manner. Creates new act.

Impact

The bill's implementation would modify existing laws governing construction payments in Michigan, making it more rigorous in terms of obligations on owners and contractors. Retainage practices are also streamlined; owners may withhold no more than 10% until a certain amount of work is completed, promoting quicker cash flow. Overall, HB 4837 seeks to mitigate disputes regarding payment delays and establish more concrete expectations within construction contracts.

Summary

House Bill 4837, known as the 'Construction Payment Act,' aims to enhance timely payment for labor, materials, and services within the private contractual construction sector. The legislation requires construction contracts to include specific payment clauses, mandating owners to pay contractors within 30 days of the end of the billing period. Furthermore, it stipulates that contractors should pay subcontractors and suppliers within seven days after receiving payments from the owner. This seeks to address delays in payments which have historically hindered financial flow in the construction industry.

Contention

Notably, the bill does not apply to public works contracts or residential contracts for properties intended for occupancy. This exclusion raises questions about coverage and protection for smaller contractors and subcontractors involved in public projects. Additionally, critics may argue that the bill could lead to ambiguous interpretations of 'satisfactory performance' and dispute administration methods, requiring effective clarification as it moves through the legislative process.