HBA-MPM H.B. 2850 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2850
By: Brimer
Business & Industry
3/18/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, contractors and subcontractors may not be adequately protected
from a decision by an owner who contracts for repair or improvements to
withhold or delay retainage payments.  Retainage is the amount of a
contract payment that is not required to be paid to a contractor or
subcontractor who performs labor, furnishes material, or delivers specially
fabricated material within a specified time period.  House Bill 2850
establishes rates at which interest accrues on retainage payments owed to
contractors and subcontractors. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2850 amends the Business & Commerce Code to provide that
retainage withheld under a construction contract, including a contract
involving a material supplier, principally for the construction or repair
of improvements to real property located in this state accrues interest at
the prime rate, with an exception. The exception is that any retainage
withheld after the 45th day after the work is completed accrues interest at
1-1/2 percent each month, and that the work is considered completed on the
date an affidavit or notice of completion is filed and delivered or the
work is actually completed if an affidavit or notice is not filed and
delivered.  Interest on retainage begins accruing on the date payment is
due for the labor performed, material furnished, or specially fabricated
material delivered.  The bill specifies the time periods when interest
stops accruing on retainage owed by the owner of real property or another
person.  

The bill specifies that no provision of this bill may be waived by contract
or otherwise. 

EFFECTIVE DATE

September 1, 2001.