98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB4658

 

Introduced , by Rep. Arthur Turner

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 603/5
815 ILCS 603/10
815 ILCS 603/15

    Amends the Contractor Prompt Payment Act. Provides that an owner may make payments on behalf of a contractor to subcontractors. Provides that, if an owner's lender requires the lender's approval before payment, the owner has an additional 25 days to obtain the approval. Provides that the Act is subject to the rights and obligations of the parties under the Mechanics Lien Act. Effective immediately.


LRB098 18540 JLS 53678 b

 

 

A BILL FOR

 

HB4658LRB098 18540 JLS 53678 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Contractor Prompt Payment Act is amended by
5changing Sections 5, 10, and 15 as follows:
 
6    (815 ILCS 603/5)
7    Sec. 5. Definitions. In this Act:
8    (a) "Payment application" means, in accordance with the
9terms and definitions of the applicable contract, any invoice,
10bill, application, or other request for periodic payment, final
11payment, payment of change order, or request for release of
12retainage from the contractor to the owner that is made in
13accordance with the terms and conditions of the applicable
14construction contract.
15    (b) "Construction contract" means a contract or
16subcontract, entered into after the effective date of this Act,
17for the design, construction, alteration, improvement, or
18repair of Illinois real property, except for contracts that
19require the expenditure of public funds and contracts for the
20design, construction, alteration, improvement, or repair of
21single family residences or multiple family residences with 12
22or fewer units in a single building.
23    (c) "Contractor" and "subcontractor" shall have the

 

 

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1meanings ascribed to them by the Illinois Mechanics Lien Act
2and cases decided under that Act.
3(Source: P.A. 95-567, eff. 8-31-07.)
 
4    (815 ILCS 603/10)
5    Sec. 10. Construction contracts.
6    (a) All construction contracts shall be deemed to provide
7the following:
8        (1) If a contractor has performed in accordance with
9    the provisions of a construction contract and the payment
10    application has been approved by the owner or the owner's
11    agent, the owner shall pay the amount due to the
12    contractor, or on behalf of the contractor to the
13    subcontractors claiming by, through, or under the
14    contractor, pursuant to the payment application not more
15    than 15 calendar days after the approval. The payment
16    application shall be deemed approved 25 days after the
17    owner receives it unless the owner provides, before the end
18    of the 25-day period, a written statement of the amount
19    withheld and the reason for withholding payment. If the
20    owner's agreement with his lender requires the lender's
21    approval of the payment application before payment, the
22    owner may take up to an additional 25 days to obtain the
23    approval before the payment application is deemed
24    approved. If the owner finds that a portion of the work for
25    which payment has been requested has not been performed in

 

 

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1    accordance with the construction contract, payment may be
2    withheld for the reasonable value of the that portion of
3    the work not performed in accordance with the construction
4    contract only. Payment shall be made for any portion of the
5    construction contract for which the work has been performed
6    in accordance with the provisions of the construction
7    contract. Instructions or notification from an owner to his
8    or her lender or architect to process or pay a payment
9    application does not constitute approval of the payment
10    application under this Act.
11        (2) If a subcontractor has performed in accordance with
12    the provisions of his or her contract with the contractor
13    or subcontractor and the work has been accepted by the
14    owner, the owner's agent, or the contractor, either the
15    owner shall pay the subcontractor within the time provided
16    for payment to the contractor in this Section or the
17    contractor shall pay to his or her subcontractor and the
18    subcontractor shall pay to his or her subcontractor, within
19    15 calendar days of the contractor's receipt from the owner
20    or the subcontractor's receipt from the contractor of each
21    periodic payment, final payment, or receipt of retainage
22    monies, the full amount received for the work of the
23    subcontractor based on the work completed or the services
24    rendered under the construction contract.
25    (b) This Act is subject to the rights and obligations of
26all parties under the Mechanics Lien Act.

 

 

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1(Source: P.A. 95-567, eff. 8-31-07.)
 
2    (815 ILCS 603/15)
3    Sec. 15. Interest; suspension of performance.
4    (a) If a payment due pursuant to the provisions of this Act
5is not made in a timely manner, the delinquent party shall be
6liable for the amount of that payment, plus interest at a rate
7equal to 10% per annum. Withholding retainage of up to 5% of a
8payment application, if the contract so provides, shall not
9create a presumption that the payment application is deemed
10approved.
11    (b) A contractor or subcontractor who is not paid as
12required by this Act may, after providing 7 calendar days'
13written notice to the party failing to make the required
14payment, suspend performance of a construction contract
15without penalty for breach of contract, until the payment
16required pursuant to this Act is made.
17    (c) The interest imposed by this Act shall not be
18duplicative of the interest charged under the Mechanics Lien
19Act.
20(Source: P.A. 95-567, eff. 8-31-07.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.