contractors; payments
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Committee on Retirement and Government Operations |
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DP |
Caucus and COW |
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X |
Third Read |
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As Passed the House |
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HB 2500 strikes all references to retention of payment regarding construction contracts.
HB 2500 passed the Retirement and Government Operations Committee unamended. HB 2500 passed the Committee of the Whole unamended.
Billings or estimates must be established in billing cycles for all construction contracts. These cycles are established in ARS §32-1129.01 as every 30 days unless otherwise requested and officially stated in the contract and a notice. Billings and estimates are approved and certified automatically 14 days after the owner or contractor receives them. The owner may decline certain items of billings or estimates or the entire statement as long as this is done before the 14 days has passed and for an accepted reason.
ARS §32-1129.02 states that contractors, subcontractors and material suppliers must be paid for their work if they have performed under the signed construction contract. This section makes an allowance for contractors or subcontractors to refuse payment to subcontractors or material suppliers who fail to do satisfactory work. The following is a list of accepted reasons for declining the approval and certification of billings and estimates and for refusal of payment to subcontractors or material suppliers: unsatisfactory job progress, defective construction work or materials not remedied, disputed work or materials, failure to comply with other material provisions of the construction contract, third party claims filed, timely payments for labor, damaged materials or reasonable evidence that a claim will be filed, failure of the contractor or a subcontractor to make reasonable evidence that the construction contract cannot be completed for the unpaid balance of the construction contract sum or a reasonable amount for retention.
Retention is a form of insurance that an owner may hold against a contractor, a contractor may hold against a subcontractor or a subcontractor may hold against a material supplier. Retention may be up to 10% of the contracted job payment and is held until the job is completed and approved. The contractor, subcontractor or material supplier must then petition the owner, contractor or subcontractor for the payment of the retention.
§ Strikes the allowance that an owner may refuse to certify and approve billings or estimates for failure of the contractor/subcontractor to make reasonable amounts for retention.
§ Deletes the option of a contractor or subcontractor to withhold payment when the subcontractor or material supplier fails to make a reasonable amount for retention that doesn’t exceed the percentage retained by the owner.
§ Makes technical and conforming changes.
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45th Legislature
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Second Regular Session 2 April
6, 2002
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