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STS Roundup: Missouri, Colorado and Ohio
June 30, 2014
Missouri will have a new retainage statute starting in August after Governor Jay Nixon signed SCS SB 529 into law last week. Under current law contractors in Missouri must pay subcontractors and suppliers when they receive payment on a public project less any retention not exceeding 10% of the value. SB 529 lowers that retention threshold to 5%. It also provides that a public owner may retain up to 10% if the contractor is not required to obtain a surety bond on the project, which is to say if the value of the project is ,000 or less. The new statute also provides that if a public owner determines that certain aspects of a public project are not substantially or satisfactorily completed, the owner must provide a written explanation within 14 calendar days to the contractor, which must then inform any subcontractor or supplier that might be held responsible. Failing to provide this notice means the public body must pay at least 98% of the retainage within 30 calendar days.Read more...
June 6, 2014
In Pennsylvania, there is legislation advancing in both the House and the Senate related to lien law. In the House, Rep. Thomas Killion is pushing revamped legislation to amend the state's 20-year-old Contractor and Subcontractor Payment law. The Republican lawmaker argues there are too many elements in the current statute that actually impede the ability of subcontractors to collect money owed to them by problem property owners or developers. A previous effort (HB 1602) spearheaded by Killion seeking to help subcontractors with payment on private construction projects passed the House by a 190-8 margin, yet it was not picked up for action by the Senate prior to the 2013-2014 Pennsylvania General Assembly session.
This time, there seems to be renewed interest in his HB 473. Among interesting new provisions and/or clarifications of old ones are:
- Owners or their agents must "conspicuously" post a copy of a Notice of Commencement at a project site before physical work commences on a property.
- Subcontractors must file a Notice of Furnishing with the directory within 20 days after the first performing work or services or provision of materials.
- Notices of Commencement must, if applicable, must include the full name, address and email of a surety for the performance and payment bonds and all bond numbers.
NewsMakers: West Virginia
June 6, 2014
In West Virginia, June 6 marks the effective date of change to the 1931 Code of West Virginia in which it becomes a full-price lien state, instead of an unpaid balance state, for commercial and certain residential projects. Residential owners will not be indebted to a contractor when the property is an existing single-family home, if the residence in question is a new owner's primary residence or if the property is an owner-occupied single-family dwelling. According to the statute, "This subdivision does not apply to a developer or builder of multiple residences except for the residence that is occupied as the primary residence of the developer or builder."
"States with unpaid balance lien laws require an extra level of diligence for suppliers and contractors," said Chris Ring, of NACM's Secured Transaction Services (STS). "These parties can't rely on a definitive date of last furnishing to file their lien because the lien is limited to funds remaining to be paid on a general contract. Because these parties are often not aware of when draw payments are cut, they are often forced to consider filing their lien well before a date of last furnishing. This is especially problematic for trades that are last on the job, such as flooring, casement and paint."