Bill Text: MS HB1304 | 2012 | Regular Session | Introduced
Bill Title: Contractors; prohibit knowing misapplication of construction payments and prescribes penalties for violation.
Spectrum: Partisan Bill (Republican 7-0)
Status: (Failed) 2012-03-06 - Died In Committee [HB1304 Detail]
Download: Mississippi-2012-HB1304-Introduced.html
MISSISSIPPI LEGISLATURE
2012 Regular Session
To: Judiciary A
By: Representatives Morgan, Boyd, Carpenter, Chism, Lott, Massengill, Turner
House Bill 1304
AN ACT TO PROHIBIT THE KNOWING AND INTENTIONAL MISAPPLICATION OF FUNDS RECEIVED ON ACCOUNT OF A CONSTRUCTION CONTRACT FOR THE SETTLEMENT OF CLAIMS FOR MATERIAL AND LABOR FOR THE CONSTRUCTION PROJECT UNDER CONTRACT; TO PRESCRIBE PENALTIES FOR VIOLATIONS OF INTENTIONAL MISAPPLICATION OF FUNDS; TO BRING FORWARD SECTIONS 31-5-25, 31-5-27 AND 31-5-31, MISSISSIPPI CODE OF 1972, FOR THE PURPOSE OF POSSIBLE AMENDMENTS; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) No person, contractor, subcontractor, or agent of a contractor or subcontractor, who has received
money on account of a contract for the construction, erection, or repair of a building, structure, or other improvement, including contracts and mortgages for interim financing, shall knowingly fail to apply the money received as necessary to settle claims for material and labor due for the construction or under the contract.
(2) When the amount misapplied is One Thousand Dollars ($1,000.00) or less, any individual who violates the provisions of this section shall be fined not less than One Hundred Dollars ($100.00) nor more than Five Hundred Dollars ($500.00), or imprisoned for not less than ninety (90) days nor more than six (6) months, or both.
(3) When the amount misapplied is greater than One Thousand Dollars ($1,000.00), whoever violates this section shall be fined not less that One Hundred Dollars ($100.00) nor more than Five Hundred Dollars ($500.00), or imprisoned for not less than ninety (90) days nor more than six (6) months, or both, for each One Thousand Dollars ($1,000.00) in misapplied funds, provided that the aggregate imprisonment shall not exceed five (5) years.
(4) Any person, contractor, subcontractor, or agent of a contractor or subcontractor who knowingly fails to apply construction contract payments as required in subsection (1) shall pay to the court, and the court shall transfer to the person whose construction contract payments were misapplied, an amount equal to the sum of the payments not properly applied and any additional legal costs resulting from the misapplication of construction
fund payments, including a fee charged by the clerk of the court for handling such payments.
SECTION 2. Section 31-5-25, Mississippi Code of 1972, is brought forward as follows:
31-5-25. (1) All sums due contractors under all public construction contracts shall be paid as follows:
(a) Partial, progress or interim payments: All partial, progress or interim payments or monies owed contractors shall be paid when due and payable under the terms of the contract. If they are not paid within forty-five (45) calendar days from the day they were due and payable, then they shall bear interest from the due date until paid at the rate of one percent (1%) per month until fully paid.
(b) Final payments: The final payment of all monies owed contractors shall be due and payable:
(i) At the completion of the project or after the work has been substantially completed in accordance with the terms and provisions of the contract;
(ii) When the owner beneficially uses or occupies the project except in the case where the project involves renovation or alteration to an existing facility in which the owner maintains beneficial use or occupancy during the course of the project;
(iii) When the project is certified as having been completed by the architect or engineer authorized to make such certification; or
(iv) When the project is certified as having been completed by the contracting authority representing the State of Mississippi or any of its political subdivisions, whichever event shall first occur.
If the contractor is not paid in full within forty-five (45) calendar days from the first occurrence of one (1) of the above-mentioned events, then said final payment shall bear interest from the date of said first occurrence at the rate of one percent (1%) per month until fully paid.
In no event shall said final payment due the contractor be made until the consent of the contractor's surety has been obtained in writing and delivered to the proper contracting authority.
(c) Contracts for the construction of prison facilities let or approved by the State Prison Emergency Construction and Management Board when exercising its emergency powers to remove two thousand (2,000) inmates from county jails are exempt from this section; however, this exemption does not apply to contracts for the construction of private correctional facilities and additional facilities at the South Mississippi Correctional Institution and the Central Mississippi Correctional Facility. This paragraph shall stand repealed from and after July 1, 1996.
(2) Contractors shall submit monthly certification to the project engineer or architect indicating payments to subcontractors on prior payment request.
SECTION 3. Section 31-5-27, Mississippi Code of 1972, is brought forward as follows:
31-5-27. When a contractor receives any payment under a public construction contract, the contractor shall, upon receipt of that payment, pay each subcontractor and material supplier in proportion to the percentage of work completed by each subcontractor and material supplier. If for any reason the contractor receives less than the full payment due under the public construction contract, the contractor shall be obligated to disburse on a pro rata basis those funds received, with the contractor, subcontractors and material suppliers each receiving a prorated portion based on the amount due on the payment. If the contractor without reasonable cause fails to make any payment to his subcontractors and material suppliers within fifteen (15) days after the receipt of payment under the public construction contract, the contractor shall pay to his subcontractors and material suppliers, in addition to the payment due them, a penalty in the amount of one-half of one percent (1/2 of 1%) per day of the delinquency, calculated from the expiration of the fifteen-day period until fully paid. The total penalty shall not exceed fifteen percent (15%) of the outstanding balance due.
SECTION 4. Section 31-5-31, Mississippi Code of 1972, is brought forward as follows:
31-5-31. Any person, firm or corporation who leases, rents or sells to any subcontractor any equipment to be used in a road construction contract, wherein a performance and payment bond is required of the general contractor, shall notify the general contractor involved in such contract that credit is being extended by them to the subcontractor and stating the terms of the credit agreement. In the event the subcontractor does not meet his payment obligations as set forth in the credit agreement, the creditor shall notify the general contractor of the nonpayment within thirty (30) days after such payment is due. The creditor shall notify the general contractor upon receipt of any payment which had been reported as past due.
Failure of the creditor to comply with the nonpayment notice provision of this section shall void the terms of the general contractor's performance and payment bond as to such creditor for such equipment leased, rented or sold.
SECTION 5. This act shall take effect and be in force from and after July 1, 2012.
