Bill > SF431

Introduced Session

This bill relates to retention fees and bonds for public improvement contracts. The bill provides that after a claim has been filed for costs incurred in the construction of a public improvement and the general contractor has filed a surety bond in double the amount of the claim in controversy with a public corporation or person withholding funds, the public corporation or person must pay to the contractor the full amount of retention funds held for the project or double the amount of the claim, whichever is less. Interest will accrue on the unpaid amount beginning on the 21st day after the public corporation’s receipt of the surety bond. The bill requires that after the contractor serves a written demand on the person filing a claim, an action must be commenced within 30 days, or the claim will be barred and the public corporation or person withholding the funds must pay the contractor the full amount of retention funds held for the project or double the amount of the claim, whichever is less. Beginning on the 21st day after the public corporation’s receipt of a payment demand by the contractor with the accompanying documents, interest shall accrue on the unpaid amount. The bill allows a principal contractor to post with the public corporation a retention bond, with surety, in the amount of 5 percent of the original contract price as a substitute for the retention funds that are retained by a public corporation from each monthly payment for labor and material on a public improvement contract. The public corporation must pay all retention funds being held to the contractor within 20 days and hold no further retention funds on the project. Beginning on the 21st day after the public corporation’s receipt of the retention bond, interest shall accrue on the unpaid amount of the retention funds. The bill strikes the requirement that the retained and unpaid funds owed to the contractor be released if an action is not commenced within 30 days of the contractor serving written demand on the person filing a claim and that the public corporation or person pay the contractor the withheld funds after an action is commenced and the general contractor has filed a surety bond. Under current law, a court may grant a reasonable attorney fee to a claimant who has established a claim. The bill changes this to require a court to grant a reasonable attorney fee to a claimant who prevails and to a principal contractor who prevails in a dispute with a public corporation related to the contract, retention funds, or the public improvement.

Committee Categories

Mike Bousselot (R)*, 

Committee report approving bill, renumbered as SF 574. S.J. 469. (on 03/10/2025)

Official Document