Bill Text: IL HB4658 | 2013-2014 | 98th General Assembly | Introduced

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Bill Title: Amends the Contractor Prompt Payment Act. Provides that an owner may make payments on behalf of a contractor to subcontractors. Provides that, if an owner's lender requires the lender's approval before payment, the owner has an additional 25 days to obtain the approval. Provides that the Act is subject to the rights and obligations of the parties under the Mechanics Lien Act. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2014-12-03 - Session Sine Die [HB4658 Detail]

Download: Illinois-2013-HB4658-Introduced.html

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98TH GENERAL ASSEMBLY State of Illinois 2013 and 2014 HB4658 Introduced , by Rep. Arthur Turner SYNOPSIS AS INTRODUCED:
815 ILCS 603/5
815 ILCS 603/10
815 ILCS 603/15
Amends the Contractor Prompt Payment Act. Provides that an owner may make payments on behalf of a contractor to subcontractors. Provides that, if an owner's lender requires the lender's approval before payment, the owner has an additional 25 days to obtain the approval. Provides that the Act is subject to the rights and obligations of the parties under the Mechanics Lien Act. Effective immediately.
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A BILL FOR
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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Contractor Prompt Payment Act is amended by
changing Sections 5, 10, and 15 as follows:
(815 ILCS 603/5)
Sec. 5. Definitions. In this Act:
(a) "Payment application" means, in accordance with the
terms and definitions of the applicable contract, any invoice,
bill, application, or other request for periodic payment, final
payment, payment of change order, or request for release of
retainage from the contractor to the owner that is made in
accordance with the terms and conditions of the applicable
construction contract.
(b) "Construction contract" means a contract or
subcontract, entered into after the effective date of this Act,
for the design, construction, alteration, improvement, or
repair of Illinois real property, except for contracts that
require the expenditure of public funds and contracts for the
design, construction, alteration, improvement, or repair of
single family residences or multiple family residences with 12
or fewer units in a single building.
(c) "Contractor" and "subcontractor" shall have the

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meanings ascribed to them by the Illinois Mechanics Lien Act
and cases decided under that Act.
(Source: P.A. 95-567, eff. 8-31-07.)
(815 ILCS 603/10)
Sec. 10. Construction contracts.
(a) All construction contracts shall be deemed to provide
the following:
(1) If a contractor has performed in accordance with
the provisions of a construction contract and the payment
application has been approved by the owner or the owner's
agent, the owner shall pay the amount due to the
contractor, or on behalf of the contractor to the
subcontractors claiming by, through, or under the
contractor, pursuant to the payment application not more
than 15 calendar days after the approval. The payment
application shall be deemed approved 25 days after the
owner receives it unless the owner provides, before the end
of the 25-day period, a written statement of the amount
withheld and the reason for withholding payment. If the
owner's agreement with his lender requires the lender's
approval of the payment application before payment, the
owner may take up to an additional 25 days to obtain the
approval before the payment application is deemed
approved. If the owner finds that a portion of the work for
which payment has been requested has not been performed in

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accordance with the construction contract, payment may be
withheld for the reasonable value of the that portion of
the work not performed in accordance with the construction
contract only. Payment shall be made for any portion of the
construction contract for which the work has been performed
in accordance with the provisions of the construction
contract. Instructions or notification from an owner to his
or her lender or architect to process or pay a payment
application does not constitute approval of the payment
application under this Act.
(2) If a subcontractor has performed in accordance with
the provisions of his or her contract with the contractor
or subcontractor and the work has been accepted by the
owner, the owner's agent, or the contractor, either the
owner shall pay the subcontractor within the time provided
for payment to the contractor in this Section or the
contractor shall pay to his or her subcontractor and the
subcontractor shall pay to his or her subcontractor, within
15 calendar days of the contractor's receipt from the owner
or the subcontractor's receipt from the contractor of each
periodic payment, final payment, or receipt of retainage
monies, the full amount received for the work of the
subcontractor based on the work completed or the services
rendered under the construction contract.
(b) This Act is subject to the rights and obligations of
all parties under the Mechanics Lien Act.

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(Source: P.A. 95-567, eff. 8-31-07.)
(815 ILCS 603/15)
Sec. 15. Interest; suspension of performance.
(a) If a payment due pursuant to the provisions of this Act
is not made in a timely manner, the delinquent party shall be
liable for the amount of that payment, plus interest at a rate
equal to 10% per annum. Withholding retainage of up to 5% of a
payment application, if the contract so provides, shall not
create a presumption that the payment application is deemed
approved.
(b) A contractor or subcontractor who is not paid as
required by this Act may, after providing 7 calendar days'
written notice to the party failing to make the required
payment, suspend performance of a construction contract
without penalty for breach of contract, until the payment
required pursuant to this Act is made.
(c) The interest imposed by this Act shall not be
duplicative of the interest charged under the Mechanics Lien
Act.
(Source: P.A. 95-567, eff. 8-31-07.)
Section 99. Effective date. This Act takes effect upon
becoming law.