Limiting Retainage Through Amending the Contractor Prompt Payment Act
Joshua Glazov over at the Construction Law Attorney Blog has an April 23, 2009, posting about Illinois House Bill 344 which, as introduced, would amend the Illinois Contractor Prompt Payment Act to limit, on a percentage basis, the amount of retainage legally allowed under construction contracts to contractors and subs.
The bill passed the house with the percentage provisions intact and the Illinois Senate now has amended the bill to include a definition of retainage:
(d) "Retainage" means funds that are earned by the contractor but not paid until some agreed upon date, such asthe completion of the job.
The senate amendment also eliminates the percentage restrictions on outright retainage and instead has proposed making this bill a restriction on retainage for materials:
(b) Under a construction contract, it is unlawful towithhold retainage on materials required for completion of the construction contract that are delivered to a job site and are billed in accordance with the periodic payments in the construction contract.
This provision is interesting given that the bill could alter the general nature of invoices by allowing those parties that do not distinguish between materials and labor in their payment applications to parse out the two and demand payment for the materials listed in the payment applications leaving the owner without recourse to its contract's retainage provision for those payments.
CLAB’s posting lists and links to some advocacy groups that can be contacted to comment on the bill.
