HB0743 95TH GENERAL ASSEMBLY

LRB095 06522 LCT 26624 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB0743

Introduced 2/7/2007, by Rep. John A. Fritchey

SYNOPSIS AS INTRODUCED:

New Act

Creates the Contractor Prompt Payment Act. Provides that all construction contracts, unless expressly excluded, shall be deemed to provide: (i) if a contractor has performed in accordance with the provisions of a construction contract and the billing has been approved by the owner or the owner's agent, the owner shall pay the amount due to the contractor pursuant to the billing not more than 10 calendar days after the approval; and (ii) if a subcontractor has performed in accordance with the provisions of his or her contract with the contractor or subcontractor and the work has been accepted by the owner, the owner's agent, or the contractor, the contractor shall pay to his or her subcontractor and the subcontractor shall pay to his or her subcontractor, within 10 calendar days of the contractor's receipt from the owner or the subcontractor's receipt from the contractor of each periodic payment, final payment, or receipt of retainage monies, the full amount received for the work of the subcontractor based on the work completed or the services rendered under the construction contract. Provides for interest and suspension of performance for nonpayment of any amount required under the Act. Effective immediately.

A BILL FOR

AN ACT concerning construction contracts.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 1. Short title. This Act may be cited as the Contractor Prompt Payment Act.

Section 5. Definitions. In this Act:

(a) "Billing" means, in accordance with the terms and definitions of the applicable contract, any invoice, bill or other request for periodic payment, final payment, payment of change order or request for release of retainage.

(b) "Construction contract" means a contract or subcontract, entered into after the effective date of this Act, for the design, construction, alteration, improvement, or repair of Illinois real property, except for contracts that require the expenditure of public funds and contracts for the design, construction, alteration, improvement, or repair of single family residences.

(c) "Contractor" and "subcontractor" shall have the meanings ascribed to them by the Illinois Mechanics Lien Act and cases decided under that Act.

Section 10. Construction contracts. All construction contracts shall be deemed to provide the following unless they expressly exclude the provisions of this Act:

(1) If a contractor has performed in accordance with the provisions of a construction contract and the billing has been approved by the owner or the owner's agent, the owner shall pay the amount due to the contractor pursuant to the billing not more than 10 calendar days after the approval. The billing shall be deemed approved 25 days after the owner receives it unless the owner provides, before the end of the 25-day period, a written statement of the amount withheld and the reason for withholding payment. If the owner finds that a portion of the work not in accordance with the contract, payment may be withheld for the reasonable value of that portion only. Payment shall be made for any portion of the contract for which the work has been performed in accordance with the provisions of the contract.

(2) If a subcontractor has performed in accordance with the provisions of his or her contract with the contractor or subcontractor and the work has been accepted by the owner, the owner's agent, or the contractor, the contractor shall pay to his or her subcontractor and the subcontractor shall pay to his or her subcontractor, within 10 calendar days of the contractor's receipt from the owner or the subcontractor's receipt from the contractor of each periodic payment, final payment, or receipt of retainage monies, the full amount received for the work of the subcontractor based on the work completed or the services rendered under the construction contract.

Section 15. Interest; suspension of performance.

(a) If a payment due pursuant to the provisions of this Act is not made in a timely manner, the delinquent party shall be liable for the amount of money owed under the construction contract, plus interest at a rate equal to 10% per annum.

(b) A contractor or subcontractor who is not paid as required by this Act may, after providing 7 calendar days' written notice to the party failing to make the required payment, suspend performance of a construction contract without penalty for breach of contract, until the payment required pursuant to this Act is made.

Section 99. Effective date. This Act shall take effect upon becoming law.