99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB4670

 

Introduced , by Rep. André M. Thapedi

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 603/5
815 ILCS 603/10
815 ILCS 603/15

    Amends the Contractor Prompt Payment Act. Provides that an owner may make payments on behalf of a contractor to subcontractors. Provides that, if an owner's lender requires the lender's approval before payment, the owner has an additional 25 days to obtain the approval. Provides that the Act is subject to the rights and obligations of the parties under the Mechanics Lien Act. Effective immediately.


LRB099 19537 JLS 43931 b

 

 

A BILL FOR

 

HB4670LRB099 19537 JLS 43931 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Contractor Prompt Payment Act is amended by
5changing Sections 5, 10, and 15 as follows:
 
6    (815 ILCS 603/5)
7    Sec. 5. Definitions. In this Act:
8    (a) "Payment application" means, in accordance with the
9terms and definitions of the applicable contract, any invoice,
10bill, application, or other request for periodic payment, final
11payment, payment of change order, or request for release of
12retainage from the contractor to the owner that is made in
13accordance with the terms and conditions of the applicable
14construction contract.
15    (b) "Construction contract" means a contract or
16subcontract, entered into after the effective date of this Act,
17for the design, construction, alteration, improvement, or
18repair of Illinois real property, except for contracts that
19require the expenditure of public funds and contracts for the
20design, construction, alteration, improvement, or repair of
21single family residences or multiple family residences with 12
22or fewer units in a single building.
23    (c) "Contractor" and "subcontractor" shall have the

 

 

HB4670- 2 -LRB099 19537 JLS 43931 b

1meanings ascribed to them by the Illinois Mechanics Lien Act
2and cases decided under that Act.
3(Source: P.A. 95-567, eff. 8-31-07.)
 
4    (815 ILCS 603/10)
5    Sec. 10. Construction contracts.
6    (a) All construction contracts shall be deemed to provide
7the following:
8        (1) If a contractor has performed in accordance with
9    the provisions of a construction contract and the payment
10    application has been approved by the owner or the owner's
11    agent, the owner shall pay the amount due to the
12    contractor, or on behalf of the contractor to the
13    subcontractors claiming by, through, or under the
14    contractor, pursuant to the payment application not more
15    than 15 calendar days after the approval. The payment
16    application shall be deemed approved 25 days after the
17    owner receives it unless the owner provides, before the end
18    of the 25-day period, a written statement of the amount
19    withheld and the reason for withholding payment. If the
20    owner's agreement with his or her lender requires the
21    lender's approval of the payment application before
22    payment, the owner may take up to an additional 25 days to
23    obtain the approval before the payment application is
24    deemed approved. If the owner finds that a portion of the
25    work for which payment has been requested has not been

 

 

HB4670- 3 -LRB099 19537 JLS 43931 b

1    performed in accordance with the construction contract and
2    notice is provided as required under this paragraph,
3    payment may be withheld for the reasonable value of the
4    that portion of the work not performed in accordance with
5    the construction contract only. Payment shall be made for
6    any portion of the construction contract for which the work
7    has been performed in accordance with the provisions of the
8    construction contract. Instructions or notification from
9    an owner to his or her lender or architect to process or
10    pay a payment application does not constitute approval of
11    the payment application under this Act.
12        (2) If a subcontractor has performed in accordance with
13    the provisions of his or her contract with the contractor
14    or subcontractor and the work has been deemed approved or
15    otherwise accepted by the owner, the owner's agent, or the
16    contractor, either the owner shall pay the subcontractor
17    within the time provided for payment to the contractor in
18    this Section or the contractor shall pay to his or her
19    subcontractor and the subcontractor shall pay to his or her
20    subcontractor, within 15 calendar days of the contractor's
21    receipt from the owner or the subcontractor's receipt from
22    the contractor of each periodic payment, final payment, or
23    receipt of retainage monies, the full amount received for
24    the work of the subcontractor based on the work completed
25    or the services rendered under the construction contract.
26    (b) This Act is subject to the rights and obligations of

 

 

HB4670- 4 -LRB099 19537 JLS 43931 b

1all parties under the Mechanics Lien Act.
2(Source: P.A. 95-567, eff. 8-31-07.)
 
3    (815 ILCS 603/15)
4    Sec. 15. Interest; suspension of performance.
5    (a) If a payment due pursuant to the provisions of this Act
6is not made in a timely manner, the delinquent party shall be
7liable for the amount of that payment, plus interest at a rate
8equal to 10% per annum.
9    (a-5) No construction contract may provide for any
10retainage in an amount that exceeds 5% of the amount of a
11progress payment or final payment for work performed under the
12construction contract.
13    (b) A contractor or subcontractor who is not paid as
14required by this Act may, after providing 7 calendar days'
15written notice to the party failing to make the required
16payment, suspend performance of a construction contract
17without penalty for breach of contract, until the payment
18required pursuant to this Act is made.
19    (c) The interest imposed by this Act shall not be
20duplicative of the interest charged under the Mechanics Lien
21Act.
22(Source: P.A. 95-567, eff. 8-31-07.)
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.