House Bill 789

(As Passed the House)

AN ACT TO AMEND SECTIONS 87-7-3 AND 87-7-5, MISSISSIPPI CODE OF 1972, TO REVISE CERTAIN PAYMENT PROVISIONS; TO REMOVE THE REFERENCE TO PRIME CONTRACTORS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 87-7-3, Mississippi Code of 1972, is amended as follows:

87-7-3. All sums due * * * contractors under all construction contracts, except public construction contracts, shall be paid as follows:

(a) Partial, progress or interim payments: all partial, progress or interim payments or monies owed contractors shall be paid when due and payable under the terms of the contract. If they are not paid within thirty (30) calendar days from the day they were due and payable, then they shall bear interest from the due date at the rate of one percent (1%) per month until fully paid.

(b) Final payments: The final payment of all monies owed contractors shall be due and payable:

(i) At the completion of the project or after the work has been substantially completed in accordance with the terms and provisions of the contract;

(ii) When the owner beneficially uses or occupies the project except in the case where the project involves renovation or alteration to an existing facility in which the owner maintains beneficial use or occupancy during the course of the project; or

(iii) When the project is certified as having been completed by the architect or engineer authorized to make such certification, whichever event shall first occur.

If the contractor is not paid in full within thirty (30) calendar days from the first occurrence of one (1) of the above-mentioned events, then the final payment shall bear interest from the date of such first occurrence at the rate of one percent (1%) per month until fully paid.

In no event shall the final payment due the contractor be made until the consent of the contractor's surety has been obtained in writing and delivered to the proper contracting authority.

SECTION 2. Section 87-7-5, Mississippi Code of 1972, is amended as follows:

87-7-5. When a * * * contractor receives any payment from the owner under a construction contract, other than a public construction contract, the * * * contractor shall, upon receipt of that payment, pay each subcontractor and material supplier in proportion to the percentage of work completed by each such subcontractor and material supplier. If for any reason the * * * contractor receives less than the full payment due from the owner, the * * * contractor shall be obligated to disburse on a pro rata basis those funds received, with the * * * contractor, subcontractors and material suppliers each receiving a prorated portion based on the amount due on the payment. If the * * * contractor without reasonable cause fails to make any payment to his subcontractors and material suppliers within fifteen (15) days after the receipt of payment from the owner under the construction contract, the * * * contractor shall pay to his subcontractors and material suppliers, in addition to the payment due them, a penalty in the amount of one-half of one percent (1/2 of 1%) per day of the delinquency, calculated from the expiration of the fifteen-day period until fully paid. The total penalty shall not exceed fifteen percent (15%) of the outstanding balance due. The provisions of this section shall not be applicable to contracts for the construction of single-family dwellings.

SECTION 3. This act shall take effect and be in force from and after July 1, 2006.