House Bill 859

AN ACT TO AMEND SECTION 87-7-5, MISSISSIPPI CODE OF 1972, TO REQUIRE PAYMENT OF ALL COSTS INCURRED BY THE PREVAILING PARTY IN DISPUTES BETWEEN CONTRACTORS AND SUBCONTRACTORS; AND FOR RELATED PURPOSES.

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

SECTION 1. 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.

If any lawsuit or arbitration is required to enforce the provisions of this section, the prevailing party or parties to any such lawsuit or arbitration shall be entitled to recover all costs incurred as directed by the judge, including but not limited to, attorney's fees and/or court or arbitration costs.

SECTION 2. This act shall take effect and be in force from and after July 1, 2007.