GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2001
H	1
HOUSE BILL 1096
     

 
Short Title:	No Retainage/Certain Construction Contracts.	()	
Sponsors:	Representative Dedmon.	
Referred to:	Rules, Calendar, and Operations of the House.	
April 11, 2001

A BILL TO BE ENTITLED
AN ACT TO PROHIBIT THE WITHHOLDING OF RETAINAGE ON CONSTRUCTION PROJECTS WHEN CERTAIN BONDS ARE PROVIDED AND TO REQUIRE, IN CONNECTION WITH CERTAIN PRIVATE CONTRACTS FOR IMPROVEMENTS TO REAL PROPERTY, A LINE ITEM RELEASE OF RETAINAGE BASED ON THE PERCENTAGE OF WORK COMPLETED AND APPROVED.

The General Assembly of North Carolina enacts:
SECTION 1.  Chapter 44A of the General Statutes is amended by adding a new Article to read as follows:
"Article 3A.
"Retainage Under Construction Contracts and Contracts for Improvements to Real Property.
"§ 44A-38.  Withholding of retainage prohibited when payment and performance bonds provided.
(a)	On any private or public construction contract, when a contractor provides to the contracting body a performance bond and a payment bond that each complies with G.S. 44A-33 and that each is in the amount of one hundred percent (100%) of the construction contract amount, the contracting body shall not withhold retainage from the contractor. On any private or public construction contract, when a subcontractor provides to the contractor a performance bond and a payment bond that each complies with G.S. 44A-33 and that each is in the amount of one hundred percent (100%) of the construction contract amount, the contractor shall not withhold retainage from the subcontractor.
(b)	On any private or public construction contract, when a contractor provides to the contracting body a performance bond and a payment bond that each complies with G.S. 44A-33 and that each is in the amount of one hundred percent (100%) of the construction contract amount, but the subcontractor does not provide to the contractor a performance bond and a payment bond that each complies with G.S. 44A-33 and that each is in the amount of one hundred percent (100%) of the construction contract amount, the contractor shall release retainage to the subcontractor by line item in accordance with G.S. 44A-38.1(b).
"§ 44-38.1.  Schedule of values for certain contracts; line-item release of retainage.
(a)	Under a private contract, when the total amount of the improvements to real estate exceeds one hundred thousand dollars ($100,000), the contractor shall provide to the owner a schedule of values that contains a separate line item for the value for each separate aspect of the work of the contractor under the contract, and each subcontractor shall provide to the contractor a schedule of values that contains a separate line item for the value for each separate aspect of the work of that subcontractor under the contract. The total amount of the line items on each schedule of values shall equal the total amount of  the respective contract.
(b)	The contractor shall submit to the owner requests for periodic payment based upon the estimated work completed, expressed as a percentage, in connection with each separate line item under the schedule of values, and the owner shall pay the contractor for approved work accordingly. Each subcontractor shall submit to the contractorrequests for periodic payment based upon the estimated work completed, expressed as a percentage, in connection with each separate line item under the schedule of values, and the contractor shall pay the subcontractor for approved work accordingly. When the work has been fully performed for each separate line item under the schedule of values and the owner has approved such work, the owner shall pay to the contractor the full amount of the separate line item under the schedule of values; the contractor shall pay to the subcontractor the full amount of the separate line item under the respective schedule of values; and neither the owner nor the contractor shall withhold any retainage or any other sum by any other designation. Approval and payment under this subsection shall not be construed as acceptance of defective or deficient work.
"§ 44A-38.2.  Scope of Article.
(a)	This Article does not apply to any contractor who has been issued a certificate to engage as a general contractor that is limited to the classification of a residential contractor under G.S. 87-10(b)(1a). This Article does not apply to improvements to real property when the real property is a family residence that satisfies the description under G.S. 83A-13.1(c)(1) as a project for which a license as an architect is not required under Chapter 83A of the General Statutes or to improvements to real property that is intended for residential purposes and that consists of 12 or fewer residential units.
(b)	Nothing in this Article prevents the contracting body or the contractor, when payment is requested, from withholding payment to the contractor or subcontractor respectively for any one or more of the following reasons:
(1)	Unsatisfactory job progress.
(2)	Defective construction not remedied.
(3)	Disputed work.
(4)	Failure of either the contractor or subcontractor to make timely payments for labor, equipment, and materials supplied to the project."
SECTION 2.  This act becomes effective October 1, 2001, and applies to all contracts entered into on or after that date.