PRINTER'S NO. 860

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

726

Session of

2015

INTRODUCED BY TOBASH, D. COSTA, DUNBAR, SAYLOR, A. HARRIS,

COHEN, PEIFER, MURT AND MOUL, MARCH 6, 2015

REFERRED TO COMMITTEE ON COMMERCE, MARCH 6, 2015

payment, for errors, for retainage, for contractor's

withholding payment and for penalty and attorney fee.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Sections 3, 5, 6, 8, 9, 11 and 12 of the act of

February 17, 1994 (P.L.73, No.7), known as the Contractor and

Subcontractor Payment Act, are amended to read:

Section 3. Application of act.

(a) Number of residential units.--This act shall not apply

to improvements to real property which consists of six or fewer

contractual provision waiving a provision of this act shall be

void.

Section 5. Owner's payment obligations.

(a) Construction contract.--The owner shall pay the

contractor strictly in accordance with terms of the construction

contract.

(b) Absence of payment term.--In the absence of a

construction contract or in the event that the construction

contract does not contain a term governing the terms of payment,

the contractor shall be entitled to invoice the owner for

progress payments at the end of the billing period. The

(d) Interest.--Except as otherwise agreed by the parties, if

any progress or final payment to a contractor is not paid within

seven days of the due date established in subsection (c), the

owner shall pay the contractor, beginning on the eighth day,

interest at the rate of [1%] 1.5% per month or fraction of a

month on the balance that is at the time due and owing.

Section 6. Owner's withholding of payment for good faith

(a) Authority to withhold.--The owner may withhold payment

for deficiency items according to the terms of the construction

(b) Notice.--[If]

withholds payment from a contractor for a deficiency item, it

shall notify the contractor of the deficiency item, by a

written explanation of its good faith reason, within seven

calendar days of the date that the invoice is received.

constitute a waiver of the basis to withhold payment and

necessitate payment of contractor in full for that invoice.

Section 8. Errors in documentation.

(a) Notice of defect.--If an invoice is filled out

due date in accordance with the provisions of this act.

Section 9. Retainage.

(a) Time for payment.--If payments under a construction

contract are subject to retainage, any amounts which have been

retained during the performance of the contract and which are

due to be released to the contractor upon final completion shall

be paid within 30 days after final acceptance of the work.

(a.1) Posting of security in lieu of retainage.--Upon

reaching substantial completion of its own scope of work, a

contractor or subcontractor may, upon approval of the party

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.

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 withholding of payment for good faith

(a) Authority to withhold.--The contractor or subcontractor

item which appears on the invoice and has been satisfactorily

completed.

(b) Notice.--[If]

subcontractor withholds payment from a subcontractor for a

deficiency item, it must notify the subcontractor or supplier

and the owner in writing of [the] its good faith reason

within seven calendar days of the date after receipt of the

notice of the deficiency item.

constitute a waiver of the basis to withhold payment and

owner, contractor or subcontractor has failed to comply with

the payment terms of this act, the arbitrator or court shall

award, in addition to all other damages due, a penalty equal

to [1%] 1.5% per month of the amount that was wrongfully

withheld.

wrongfully withheld [to the extent it] if all of the

following apply:

(b) Award of attorney fee and expenses.--Notwithstanding any

agreement to the contrary, the substantially prevailing party in

any proceeding to recover any payment under this act shall be

awarded a reasonable attorney fee in an amount to be determined

by the court or arbitrator, together with expenses.