Summary of the Introduced Bill

HB 662 -- Private Building Contracts

Co-Sponsors:  Green (73), St. Onge

This bill creates several requirements and restrictions
involving "retainage," the practice of withholding a percentage
of the payment for a construction project, pending satisfactory
completion of the project.  The bill limits retainage to 5% of
the contract.  The contractor may give the owner a substitute
security and demand payment of the retainage.  Subcontractors
may do the same with contractors.  The bill sets forth the types
of securities that will satisfy the requirement, including
bonds, certificates of deposit, and unconditional letters of
credit.  Contractors are entitled to any income earned from the
securities while deposited with the owner.  Contractors may not
withhold extra retainage from a subcontractor, unless the
subcontractor's performance is not in accordance with the terms
of the subcontract.  Contractors must pass along to any
subcontractors the retainage they are paid on a pro rata basis.
Construction contracts will be unenforceable to the extent that
they are inconsistent with the requirements of the bill.  Courts
may award 18% interest on improperly withheld retainage and may
award attorney's fees in actions to enforce the bill.  Contracts
for the construction of residential buildings with 4 or fewer
units are exempt from the bill.

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Missouri House of Representatives
Last Updated September 13, 2001 at 2:03 pm