MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Judiciary B

By: Representative Wallace

AN ACT TO AMEND SECTIONS 31-5-27, 31-5-33 AND 87-7-5, MISSISSIPPI CODE OF 1972, TO REQUIRE A CONTRACTOR TO PAY A SUBCONTRACTOR WITHIN FORTY-FIVE DAYS OF SUBMISSION OF AN APPLICATION FOR PAYMENT TO THE CONTRACTOR; TO REVISE RETAINAGE PROVISIONS; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 31-5-27, Mississippi Code of 1972, is amended as follows:

31-5-27. When a contractor receives any payment under 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 subcontractor and material supplier. If for any reason the contractor receives less than the full payment due under the public construction contract, 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. Notwithstanding nonpayment from the owner to the contractor, the contractor shall pay the subcontractor within forty-five (45) days of the subcontractor's submission of an application for payment to the subcontractor. 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 under the public construction contract, or within for forty-five (45) days of the subcontractor's submission of an application for payment to the contractor, 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 15-day period until fully paid. The total penalty shall not exceed fifteen percent (15%) of the outstanding balance due.

SECTION 2. Section 31-5-33, Mississippi Code of 1972, is amended as follows:

31-5-33. (1) In any contract for the construction, repair, alteration or demolition of any building, structure or facility awarded by the State of Mississippi, or any agency, unit or department of the State of Mississippi, or by any political subdivision thereof, which contract provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the state agency, unit or department, or by the political subdivision or contractor pending completion of the contract, such retainage shall be five percent (5%), and the amount retained by the prime contractor from each payment due the subcontractor shall not exceed the percentage withheld by the state, or any agency, unit or department of the state, or by any political subdivision thereof, from the prime contractor.

On any contract as described herein, of which the total amount is Two Hundred Fifty Thousand Dollars ($250,000.00) or greater, five percent (5%) shall be retained until the work is at least fifty percent (50%) complete, on schedule and satisfactory in the architect's and/or engineer's opinion, at which time fifty percent (50%) of the retainage held to date shall be returned to the prime contractor for distribution to the appropriate subcontractors and suppliers. Provided, however, that future retainage shall be withheld at the rate of two and one-half percent (21/2%).

(2) The provisions of this section shall not apply to contracts let by the Mississippi Transportation Commission for the construction, improvement or maintenance of roads and bridges.

SECTION 3. Section 87-7-5, Mississippi Code of 1972, is amended as follows:

87-7-5. When a prime contractor receives any payment from the owner under a construction contract, other than a public construction contract, the prime 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 prime contractor receives less than the full payment due from the owner, the prime contractor shall be obligated to disburse on a pro rata basis those funds received, with the prime contractor, subcontractors and material suppliers each receiving a prorated portion based on the amount due on the payment. Notwithstanding payment from the owner to the contractor, the contractor shall pay the subcontractor within forty-five (45) days of the subcontractor's submission of an application for payment to the subcontractor. If the prime 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, or within forty-five (45) days of the subcontractor's submission of any application for payment to the contractor, the prime 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 15-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 4. This act shall take effect and be in force from and after July 1, 2000.