Construction contracts; provide certain requirements regarding payment and retainage.
The bill will amend existing laws by setting maximum retainage limits at 5% for construction contracts above a certain threshold. If homeowners or contractors withhold more than the allowed retainage, they will incur interest charges. The bill also outlines how retainage should be released based on the progress of the work, thus providing assurance to subcontractors that they will receive their due payments in a timely manner. Additionally, it provides contractors the ability to take legal action to recover unpaid amounts plus interest, thereby enhancing their financial security.
House Bill 272 aims to establish clear terms for payments between owners, contractors, subcontractors, sub-subcontractors, and material suppliers within Mississippi. The bill mandates that payments must be made within specified timeframes, requiring owners to pay contractors promptly after receiving a request for payment and contractors to pay their subcontractors within seven days of receiving payment from the owners. If payments are not made on time, the responsible party must pay interest on the unpaid balance, thus providing a financial incentive for compliance.
Some potential points of contention regarding HB 272 could arise from its specific exclusions, such as residential homebuilding and contracts under $10,000, which could be viewed as unfair exclusions by small contractors or those involved in residential projects. Critics may argue that these exceptions limit the bill’s effectiveness in providing comprehensive protections for all construction workers. Similarly, the interpretation of what constitutes proper work performance remains subjective, potentially leading to disputes between contractors and clients regarding payment withholding.