Public Act 095-0567
 		





HB0743 Enrolled
LRB095 06522 LCT 26624 b






    AN ACT concerning construction contracts.

 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:


 
    Section 1. Short title. This Act may be cited as the 
Contractor Prompt Payment Act.
 
    Section 5. Definitions.    In this Act:
    (a)  "Payment application" means, in accordance with the 
terms and definitions of
the applicable contract, any invoice, 
bill or other request for periodic payment, final payment, 
payment of  change order or request for release of retainage 
from the contractor to the owner.
    (b)  "Construction contract" means a contract or 
subcontract, entered into after the effective date of this Act, 
for  the design, construction, alteration, improvement, or 
repair of Illinois real property, except for contracts that 
require the expenditure of public funds and contracts for the 
design, construction, alteration, improvement, or repair of 
single family residences or multiple family residences with 12 
or fewer units in a single building.
    (c)  "Contractor" and "subcontractor" shall have the 
meanings ascribed to them by the Illinois Mechanics Lien Act 
and cases decided under that Act.
 
    Section 10. Construction contracts.   All construction 
contracts shall be deemed to provide the following:
    (1) If a contractor has performed in accordance with the 
provisions of a construction contract and the payment 
application has been approved by the owner or the owner's 
agent, the owner shall pay the amount due to the contractor 
pursuant to the payment application not more than 15 calendar 
days after the approval.  The payment application shall be 
deemed approved 25 days after the owner receives it unless the 
owner provides, before the end of the 25-day period, a written 
statement of the amount withheld and the reason for withholding 
payment.  If the owner finds that  a portion of the work not  in 
accordance with the contract, payment may be withheld for the 
reasonable value of that portion only.  Payment shall be made 
for any portion of the contract for which the work has been 
performed in accordance with the provisions of the contract. 
Instructions or notification from an owner to his or her lender 
or architect to process or pay a payment application does not 
constitute approval of the payment application under this Act.
    (2) If a subcontractor has performed in accordance with the 
provisions of his or her contract with the contractor or 
subcontractor and the work has been accepted by the owner, the 
owner's agent, or the contractor, the contractor shall pay to 
his or her subcontractor and the subcontractor shall pay to his 
or her subcontractor, within 15 calendar days of the 
contractor's receipt from the owner or the subcontractor's 
receipt from the contractor of each periodic payment, final 
payment, or receipt of retainage monies, the full amount 
received for the work of the subcontractor based on the work 
completed or the services rendered under the construction 
contract.
 
    Section 15. Interest; suspension of performance. 
    (a) If a payment due pursuant to the provisions of this Act 
is not made in a timely manner, the delinquent party shall be 
liable for the amount of that payment, plus interest at a rate 
equal to 10% per annum.
    (b) A  contractor or subcontractor who is not paid as 
required by this Act  may, after providing 7 calendar days' 
written notice to the party failing to make the required 
payment, suspend performance of a construction contract 
without penalty for breach of contract, until the payment 
required pursuant to this Act  is made.
    (c) The interest imposed by this Act shall not be 
duplicative of the interest charged under the Mechanics Lien 
Act.

 
    Section 99. Effective date. This Act shall take effect upon 
becoming law.