Sec. 42-158j. Required contract provisions re timely payment of contractors,
subcontractors and suppliers. Remedy for untimely payments. Penalties. Escrow
accounts. Withholding payments due because of disputes, when prohibited. Progress payments. Rights of action. (a) Each construction contract shall contain the
following provisions: (1) A requirement that the owner pay any amounts due any contractor, subcontractor or supplier in a direct contractual relationship with the owner,
whether for labor performed or materials furnished, not later than thirty days after the
date any written request for payment has been made by such contractor, subcontractor
or supplier; (2) a requirement that the contractor pay any amounts due any subcontractor
or supplier, whether for labor performed or materials furnished, not later than thirty
days after the date the contractor receives payment from the owner which encompasses
labor performed or materials furnished by such subcontractor or supplier; and (3) a
requirement that the contractor shall include in each of its subcontracts a provision
requiring each subcontractor and supplier to pay any amounts due any of its subcontractors or suppliers, whether for labor performed or materials furnished, not later than thirty
days after the date such subcontractor or supplier receives a payment from the contractor
which encompasses labor performed or materials furnished by such subcontractor or
supplier.
(b) (1) If payment is not made by an owner in accordance with the requirements
of subdivision (1) of subsection (a) of this section or any applicable construction contract, such contractor, subcontractor or supplier shall set forth its claim against the owner
through notice by registered or certified mail.
(2) If payment is not made by a contractor in accordance with the requirements of
subdivision (2) of subsection (a) of this section or any applicable construction contract,
the subcontractor or supplier shall set forth its claim against the contractor through notice
by registered or certified mail.
(3) If payment is not made by a subcontractor or supplier in accordance with the
provisions of subdivision (3) of subsection (a) of this section, the subcontractor or supplier to whom money is owed shall set forth its claim against the subcontractor or supplier
who has failed to comply with the provisions of said subdivision (3) through notice by
registered or certified mail.
(4) Ten days after the receipt of any notice specified in subdivisions (1), (2) and
(3) of this subsection, the owner, contractor, subcontractor or supplier, as the case may
be, shall be liable for interest on the amount due and owing at the rate of one per cent
per month. Such interest shall accrue beginning on the date any such notice is received.
In addition, such owner, contractor, subcontractor or supplier, upon written demand
from the party providing such notice, shall be required to place funds in the amount of
the claim, plus such interest of one per cent per month, in an interest-bearing escrow
account in a bank in this state, provided such owner, contractor, subcontractor or supplier
may refuse to place the funds in escrow on the grounds that the party making such
demand has not substantially performed the work or supplied the materials according
to the terms of the construction contract. In the event that such owner, contractor, subcontractor or supplier refuses to place such funds in escrow and such owner, contractor,
subcontractor or supplier is found to have unreasonably withheld payment due a party
providing such notice, such owner, contractor, subcontractor or supplier shall be liable
to the party making demand for payment of such funds and for reasonable attorneys'
fees plus interest on the amount due and owing at the rate of one per cent per month. In
addition, any owner, contractor, subcontractor or supplier who is found to have withheld
payments to a party providing such notice in bad faith shall be liable for ten per cent
damages.
(c) No payment may be withheld from a subcontractor or supplier for work performed or materials furnished because of a dispute between a contractor and another
contractor, subcontractor or supplier.
(d) This section shall not be construed to prohibit progress payments prior to final
payment of the contract and is applicable to all subcontractors and suppliers for material
or labor whether they have contracted directly with the contractor or with some other
subcontractor on the work. Each owner that enters into a contract under this section and
fails or neglects to make payment to a contractor for labor and materials supplied under
a contract, as required pursuant to this section, shall, upon demand of any person who
has not been paid by the contractor for such labor and materials supplied in the performance of the work under the contract, promptly pay the person for such labor or materials.
Demand for payment shall be served on the owner and a copy of each demand shall be
sent to the contractor by certified mail, return receipt requested to any address at which
the owner and contractor conduct business. If the owner fails to make such payment,
the person shall have a direct right of action against the owner in the superior court for
the judicial district in which the project is located. The owner's obligations for direct
payments to the contractor, subcontractors or suppliers giving notice pursuant to this
section shall be limited to the amount owed to the contractor by the owner for work
performed under the contract at the date such notice is provided.
(P.A. 99-153, S. 2; P.A. 04-202, S. 2.)
History: P.A. 04-202 amended Subsec. (a) by making provisions mandatory, amending within said Subsec. Subdiv.
(1) to change the time within which an owner shall pay a contractor, subcontractor or supplier from fifteen days to thirty
days from any written request, Subdiv. (2) to change the time within which a contractor shall pay any subcontractor or
supplier from fifteen to thirty days, and Subdiv. (3) to change time within which a subcontractor or supplier shall pay its
subcontractors or suppliers from fifteen to thirty days, amended Subsec. (b)(4) by making an owner, contractor, subcontractor or supplier liable to the party making demand for payment of funds, and amended Subsec. (d) by adding provisions
that each owner who enters into a contract under this section and who fails or neglects to pay the contractor, shall, upon
demand of any person who has not been paid by the contractor, promptly pay such person, that the demand be served on
the owner and a copy sent to the contractor, that if the owner fails to make payment, the person shall have a direct right of
action against the owner, and that the owners obligation for direct payments are limited to the amount owed to the contractor
by the owner.
Sec. 42-158k. Retainage limitation. No construction contract may provide for
any retainage in an amount that exceeds seven and one-half per cent of the estimated
amount of a progress payment for the life of the construction project.
(P.A. 99-153, S. 3; P.A. 03-167, S. 8.)
History: P.A. 03-167 deleted provision re section not to be construed to require construction contract to contain retainage
provision, effective January 1, 2004.
Sec. 42-158l. Clauses waiving right to claim mechanic's lien or claim against
a payment bond void. (a) Any provision in a construction contract or any periodic lien
waiver issued pursuant to a construction contract that purports to waive or release the
right of a contractor, subcontractor or supplier engaged to perform services, perform
labor or furnish materials under the construction contract to (1) claim a mechanic's lien,
or (2) make a claim against a payment bond, for services, labor or materials which have
not yet been performed and paid for shall be void and of no effect.
(b) Notwithstanding any provision of subsection (a) of this section, this section shall
not be construed to prohibit (1) the subordination of a mechanic's lien to the lien of a
mortgage or security interest, or (2) the enforcement of an agreement to subordinate a
mechanic's lien to the lien of a mortgage or security interest.
(P.A. 99-153, S. 4.)
Sec. 42-158m. Adjudication in this state. Any provision in a construction contract for the performance of work on a construction site located in this state that purports
to require that any dispute arising under the construction contract be adjudicated in or
under the laws of a state other than Connecticut shall be void and of no effect, regardless
of whether the construction contract was executed in this state.
(P.A. 99-153, S. 5.)
Sec. 42-158n. Required job site postings. At or before the commencement of any
work under a construction contract, the owner shall post and maintain in a conspicuous
place at the construction site (1) the name and address of the owner and any agent
authorized to accept service of a certificate of mechanic's lien on behalf of the owner
in any action, suit or proceeding for the enforcement of any obligation of the owner
arising out of the construction contract, (2) the volume and page number of the land
records of the town in which such property is located, and (3) if a payment bond exists,
the name and address of the surety that issued the payment bond.
(P.A. 99-153, S. 6.)
Sec. 42-158o. Surety obligations. No surety shall be obligated to include in the
payment of a bond issued by such surety any interest, costs, penalties or attorneys' fees
imposed on the principal of such bond under any provision of sections 42-158i to 42-158o, inclusive, or 49-33 or subsection (a) of section 52-249, unless the terms of the bond
expressly reference said sections and subsection and state that such surety is obligated to
pay such interest, costs, penalties or attorneys' fees.
(P.A. 99-153, S. 9.)
Sec. 42-158p. Retainage escrow accounts. Monthly reports. Combining accounts. Termination of accounts. Fees and expenses. Form and provision of account. Failure to deposit or release retainage. Acceptance of securities. An escrow
account shall be established for all retainage, subject to the following:
(a) An escrow account shall be established in state or national banks domiciled in
this state or in savings and loan associations domiciled in this state.
(b) The owner shall provide a monthly report to the contractor as to the value of
the retainage being held in the escrow account and any additions to or payments from
the escrow account. Upon request by a subcontractor, the contractor shall make such
monthly report available for review by the subcontractor. Withdrawals from the escrow
account shall be made only subject to approval of the owner.
(c) If the owner has entered into more than one construction contract with the same
contractor requiring the maintenance of escrow accounts, the owner may elect to combine the amounts held as retainage under each contract into one or more escrow accounts
or may establish a separate escrow account for each contract.
(d) The escrow account shall be terminated upon substantial or final completion of
all work in accordance with the terms of the construction contract and full payment to
the contractor.
(e) All fees and expenses related to maintaining the escrow account shall be paid
by the owner.
(f) The form and provisions of the escrow account shall be included in all solicitations for construction services and shall be provided to the contractor and subcontractor
prior to entering into a contract with the owner. Upon request by a subcontractor, the
contractor shall make such form and provisions available for review by the subcontractor. Failure to comply with the provisions of this subsection shall not give rise to a
defense to the enforcement of a contract.
(g) If an owner fails to deposit retainage that is withheld or to release retainage as
required by public act 03-167*, the owner shall pay to the contractor an additional one
and one-half per cent of the amount not deposited or released for each month or fraction
of a month, until the retainage amount is paid in full.
(h) An owner may accept securities in lieu of retainage from a contractor and a
contractor may accept securities in lieu of retainage from a subcontractor.
(i) For the purposes of this section, "owner" means "owner", as defined in subdivision (1) of section 42-158i.
(P.A. 03-167, S. 6.)
*Public act 03-167 is entitled "An Act Concerning Retainage, the New Home Construction Act, the Home Improvement
Contractor Act and the Home Solicitation Sales Act". (See Reference Table captioned "Public Acts of 2003" in Volume
16 which lists the sections amended, created or repealed by the act.)
History: P.A. 03-167 effective January 1, 2004.