PRINTER'S NO. 1556
No. 1337 Session of 1999
INTRODUCED BY TULLI, BATTISTO, BELFANTI, BROWNE, BUNT, BUXTON,
CORRIGAN, DALLY, FAIRCHILD, GANNON, LEDERER, MARSICO,
McILHATTAN, MELIO, STEELMAN, WILT AND YOUNGBLOOD,
APRIL 20, 1999
REFERRED TO COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT,
APRIL 20, 1999
AN ACT
1 Amending the act of February 17, 1994 (P.L.73, No.7), entitled
2 "An act requiring timely payment to certain contractors and
3 subcontractors; and providing remedies to contractors and
4 subcontractors," providing that construction contract
5 payments be held in trust; and further providing for
6 penalties.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Section 4 of the act of February 17, 1994
10 (P.L.73, No.7), known as the Contractor and Subcontractor
11 Payment Act, is amended to read:
12 Section 4. Performance by contractor or subcontractor.
13 (a) General rule.--Performance by a contractor or a
14 subcontractor, architect or engineer in accordance with the
15 provisions of a contract shall entitle the contractor or
16 subcontractor, architect or engineer to payment from the party
17 with whom the contractor or subcontractor, architect or engineer
18 has contracted.
1 (b) Status as a trust fund.--Any amount paid in connection
2 with a construction contract by any person to an owner,
3 developer, contractor or subcontractor shall be held by such
4 recipient as a trust fund, for the benefit of those to whom the
5 recipient owes funds on said construction project to the extent
6 that the amount paid consists of funds due on account of labor,
7 material or professional services supplied to or for the project
8 contemplated by the construction contract.
9 Section 2. Section 12 of the act is amended by adding a
10 subsection to read:
11 Section 12. Penalty and attorney fee.
12 * * *
13 (a.1) Fraudulent detention or use by owner, developer,
14 contractor or subcontractor.--
15 (1) Notwithstanding any agreement to the contrary, any
16 owner, developer, contractor or subcontractor engaged in
17 construction who, with intent to defraud, shall retain or use
18 the proceeds or any part thereof, of any payment made to him,
19 for any purpose other than to first pay amounts due or to
20 become due to those engaged by him to furnish labor, material
21 or professional services for the specific improvement or who
22 appropriates the funds to his own use while any amount for
23 which he may be liable or become liable under the terms of
24 his contract for the labor, material or professional services
25 for the specific improvement remains unpaid, and may be
26 prosecuted upon the complaint of any persons so defrauded,
27 commits a felony of the third degree and shall, upon
28 conviction, be sentenced to pay a fine of not less than $100
29 nor more than $5,000 or to imprisonment for not less than six
30 months nor more than three years, or both.
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1 (2) The appropriation by an owner, developer, contractor
2 or subcontractor of any moneys paid to him in connection with
3 construction before the payment by him of all moneys due or
4 to become due to those who furnished labor, material or
5 professional services and entitled to payment shall be
6 evidence of intent to defraud.
7 Section 3. This act shall take effect in 60 days.
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