Bill Text: OR SB405 | 2013 | Regular Session | Enrolled
Bill Title: Relating to payment amounts withheld as retainage.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2013-06-21 - Effective date, January 1, 2014. [SB405 Detail]
Download: Oregon-2013-SB405-Enrolled.html
77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session
Enrolled
Senate Bill 405
Sponsored by Senator SHIELDS (Presession filed.)
CHAPTER ................
AN ACT
Relating to payment amounts withheld as retainage; creating new
provisions; and amending ORS 279C.555, 701.420 and 701.430.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 279C.555 is amended to read:
279C.555. The withholding of retainage by a contractor or
subcontractor on public improvement contracts shall be in
accordance with ORS 701.420 { - and 701.430 except when the
charter of the contracting agency contains provisions requiring
retainage by the contracting agency of more than five percent of
the contract price of the work completed - } .
SECTION 2. ORS 701.420 is amended to read:
701.420. (1) Partial payment is allowed and may be made on
contracts for construction and home improvement. { - Except as
provided in ORS 701.430 (2), - } An owner, contractor or
subcontractor may withhold as retainage an amount equal to not
more than five percent of the contract price of the work
completed. Partial payment allowed under this subsection is not
acceptance or approval of some of the work or a waiver of defects
in the work.
(2) The owner, contractor or subcontractor shall pay interest
at the rate of one percent per month on the final payment due the
contractor or subcontractor. { - Except as provided in ORS
701.430 (2), - } The interest shall commence 30 days after the
contractor or subcontractor has completed and the owner has
accepted the work under the contract for construction for which
the final payment is due. The interest shall run until the date
when final payment is tendered to the contractor or
subcontractor. When the contractor or subcontractor considers the
work that the contractor or subcontractor is contracted to
perform to be complete, the contractor or subcontractor shall
notify the party to whom the contractor or subcontractor is
responsible for performing the construction work under the
contract. The party shall, within 15 days after receiving the
notice, either accept the work or notify the contractor or
subcontractor of work yet to be performed under the contract. If
the party does not accept the work or does not notify the
contractor or subcontractor of work yet to be performed within
the time allowed, the interest required under this subsection
shall commence 30 days after the end of the 15-day period.
(3) When a contractor pays a subcontractor in full, including
the amount the contractor withheld as retainage, the owner with
whom the contractor has the contract shall pay the contractor,
Enrolled Senate Bill 405 (SB 405-A) Page 1
out of the amount that the owner withheld from the contractor as
retainage, a sum equal to the amount of retainage that the
contractor paid the subcontractor. The contractor shall notify
the owner when the contractor pays a subcontractor in full under
this section and the owner shall, within 15 days after receiving
the notice, pay the contractor the amount due the contractor
under this subsection. Interest on the amount due the contractor
at the rate of one percent per month shall commence 30 days after
the owner receives notice of full payment to the subcontractor.
SECTION 3. ORS 701.430 is amended to read:
701.430. { - (1) Except as provided in subsection (2) of this
section, - } A contractor or subcontractor may execute and
deliver to the owner, contractor or subcontractor before the
commencement of construction for which the contractor or
subcontractor will be responsible for performing a good and
sufficient bond in a sum equal to the contract price for the
faithful performance of the contract. The term of the bond
{ - required - } { + obtained + } under this subsection
{ - shall - } { + must + } extend to include the period during
which claims of lien or notices of other encumbrances based on
the construction performed under the contract may be filed under
applicable law. The bond must be approved by the owner,
contractor or subcontractor entitled to withhold retainage. A
faithful performance bond delivered under this section
{ - shall - } { + must + } include, but not be limited to,
provisions to the effect that:
{ - (a) - } { + (1) + } The obligations of the contract
{ - shall - } { + must + } be faithfully performed;
{ - (b) - } { + (2) + } Payment { - shall - } { +
must + } promptly be made to all persons supplying labor or
materials to the contractor or subcontractor for prosecution of
the work provided in the contract;
{ - (c) - } { + (3) + } All contributions due the
Industrial Accident Fund and the { - State - } Unemployment
Compensation { + Trust + } Fund from the contractor or
subcontractor in connection with the performance of the contract
{ - shall - } { + must + } { - promptly - } be made { +
promptly + }; and
{ - (d) - } { + (4) + } All sums required to be deducted
and retained from the wages of employees of the contractor or
subcontractor pursuant to the Personal Income Tax Act of 1969,
{ - shall - } { + must + } be paid over to the Department of
Revenue.
{ - (2) When a contractor or subcontractor does not obtain
the bond required under subsection (1) of this section, the
owner, contractor or subcontractor may withhold that percentage
of the contract price of the work completed as retainage that is
agreed to by the parties to the contract. The owner, contractor
or subcontractor shall pay interest at the rate of one percent
per month on the final payment due a contractor or subcontractor
who was unable to obtain the bond required under subsection (1)
of this section. The interest shall commence 10 days after the
date on which claims of lien or notices of other encumbrances
based on the construction performed under the contract must be
properly filed under applicable law. For purposes of this
subsection, ' final payment due a contractor or subcontractor'
means the amount withheld as retainage minus the total dollar
amount of liens and other encumbrances resulting from the failure
of the contractor or subcontractor to faithfully perform the
Enrolled Senate Bill 405 (SB 405-A) Page 2
obligations of the contract and properly filed within the time
allowed under applicable law. - }
SECTION 4. { + The amendments to ORS 279C.555, 701.420 and
701.430 by sections 1 to 3 of this 2013 Act apply to contracts
entered into on or after January 1, 2014. + }
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Passed by Senate March 11, 2013
.............................................................
Robert Taylor, Secretary of Senate
.............................................................
Peter Courtney, President of Senate
Passed by House June 3, 2013
.............................................................
Tina Kotek, Speaker of House
Enrolled Senate Bill 405 (SB 405-A) Page 3
Received by Governor:
......M.,............., 2013
Approved:
......M.,............., 2013
.............................................................
John Kitzhaber, Governor
Filed in Office of Secretary of State:
......M.,............., 2013
.............................................................
Kate Brown, Secretary of State
Enrolled Senate Bill 405 (SB 405-A) Page 4
