retainage on its contract before final completion of the project
by posting a maintenance bond with approved surety for 120% of
the amount of retainage being held.
(b) Agreement between contractor and subcontractor.--If an
owner is not withholding retainage, a contractor may withhold
retainage from a subcontractor in accordance with their
agreement. The retainage shall be paid within 30 days after
final acceptance of the work.
(c) Payment of retainage to subcontractors.--A contractor
shall pay to the contractor's subcontractors, and each
subcontractor shall in turn pay to the subcontractor's
subcontractors, within 14 days after receipt of the retainage,
the full amount due each subcontractor.
(d) Withholding acceptance or failure to pay retainage.--
Withholding of retainage for longer than 30 days after final
acceptance of the work shall be subject to the obligations
imposed upon the owner, contractor or subcontractor in section
6(b) or 11(b). If an owner, contractor or subcontractor
unreasonably withholds acceptance of work or fails to pay
retainage as required by this section, the owner, contractor or
subcontractor shall be subject to the payment of interest at the
rate established in section 5(d) on the balance due and owing on
the date acceptance was unreasonably withheld or the date the
retainage was due and owing, whichever is applicable. The owner,
contractor or subcontractor shall also be subject to the
provisions of section 12.
Section 11. Contractor's and subcontractor's withholding of
payment for good faith claims.
(a) Authority to withhold.--The contractor or subcontractor
may withhold payment from any subcontractor responsible for a
deficiency item. The contractor or subcontractor shall pay any
subcontractor according to the provisions of this act for any
item which appears on the invoice and has been satisfactorily
completed.
(b) Notice.--[If]
(1) Except as provided under section 9, if a contractor
or subcontractor withholds payment from a subcontractor for a
deficiency item, [it] the contractor or subcontractor
withholding payment must notify the subcontractor [or
supplier and the owner of the reason within] and the owner in
writing of the good faith reason for the withholding within
the time period specified in the construction contract or
[seven] 14 calendar days of the date after receipt of the
notice of the deficiency item.
(2) Failure to comply with paragraph (1) shall
constitute a waiver of the basis to withhold payment and
necessitate payment of the subcontractor in full for the
invoice.
(c) Amount of withholding.--If a contractor or subcontractor
withholds payment from a subcontractor for a deficiency item,
the contractor or subcontractor withholding payment shall remit
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