HB4658 98TH GENERAL ASSEMBLY

LRB098 18540 JLS 53678 b

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.

A BILL FOR

AN ACT concerning business.

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

Section 5. The Contractor Prompt Payment Act is amended by changing Sections 5, 10, and 15 as follows:

(815 ILCS 603/5)

Sec. 5. Definitions. In this Act:

(a) "Payment application" means, in accordance with the terms and definitions of the applicable contract, any invoice, bill, application, or other request for periodic payment, final payment, payment of change order, or request for release of retainage from the contractor to the owner that is made in accordance with the terms and conditions of the applicable construction contract.

(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 or multiple family residences with 12 or fewer units in a single building.

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

(Source: P.A. 95-567, eff. 8-31-07.)

(815 ILCS 603/10)

Sec. 10. Construction contracts.

(a) All construction contracts shall be deemed to provide the following:

(1) If a contractor has performed in accordance with the provisions of a construction contract and the payment application has been approved by the owner or the owner's agent, the owner shall pay the amount due to the contractor, or on behalf of the contractor to the subcontractors claiming by, through, or under the contractor, pursuant to the payment application not more than 15 calendar days after the approval. The payment application 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's agreement with his lender requires the lender's approval of the payment application before payment, the owner may take up to an additional 25 days to obtain the approval before the payment application is deemed approved. If the owner finds that a portion of the work for which payment has been requested has not been performed in accordance with the construction contract, payment may be withheld for the reasonable value of the that portion of the work not performed in accordance with the construction contract only. Payment shall be made for any portion of the construction contract for which the work has been performed in accordance with the provisions of the construction contract. Instructions or notification from an owner to his or her lender or architect to process or pay a payment application does not constitute approval of the payment application under this Act.

(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, either the owner shall pay the subcontractor within the time provided for payment to the contractor in this Section or the contractor shall pay to his or her subcontractor and the subcontractor shall pay to his or her subcontractor, within 15 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.

(b) This Act is subject to the rights and obligations of all parties under the Mechanics Lien Act.

(Source: P.A. 95-567, eff. 8-31-07.)

(815 ILCS 603/15)

Sec. 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 that payment, plus interest at a rate equal to 10% per annum. Withholding retainage of up to 5% of a payment application, if the contract so provides, shall not create a presumption that the payment application is deemed approved.

(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.

(c) The interest imposed by this Act shall not be duplicative of the interest charged under the Mechanics Lien Act.

(Source: P.A. 95-567, eff. 8-31-07.)

Section 99. Effective date. This Act takes effect upon becoming law.