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HOUSE BILL 26-1311
BY REPRESENTATIVE(S) Duran and Carter, Gonzalez R., Titone;
also SENATOR(S) Bright and Snyder, Amabile, Benavidez, Cutter, Exum,
Frizell, Gonzales J., Jodeh, Kipp, Kolker, Rodriguez, Wallace, Coleman.
CONCERNING THE USE OF A BOND IN LIEU OF RET AINA GE IN CONSTRUCTION
CONTRACTS.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. In Colorado Revised Statutes, 38-46-101, add (2.5)
and (4.5) as follows:
38-46-101. Definitions.
As used in this article 46, unless the context otherwise requires:
(2.5) "LIKE BOND" MEANS A RETAINAGE BOND SUBMITTED BY A
SUBCONTRACTOR TO A CONTRACTOR OR SUBCONTRACTOR THAT IS
SUBSTANTIALLY EQUIVALENT TO THE RETAINAGE BOND SUBMITTED BY THE
CONTRACTOR OR SUBCONTRACTOR TO THE PROPERTY OWNER OR
CONTRACTOR.
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act.
( 4.5) "RETAINAGE BOND" MEANS A SURETY BOND THAT IS ISSUED BY
AN INSURER LICENSED TO ISSUE THE BOND IN COLORADO AS ASSURANCE FOR
THE PERSON ACCEPTING THE BOND THAT:
(a) A CONTRACT OR SUBCONTRACT WILL BE SATISFACTORILY
COMPLETED; OR
(b) THE GOODS, MATERIALS, OR EQUIPMENT MEETS THE
SPECIFICATIONS NECESSARY FOR SATISFACTORY PERFORMANCE OF A
CONTRACT OR SUBCONTRACT.
SECTION 2. In Colorado Revised Statutes, 38-46-103, amend (1)
as follows:
38-46-103. Private construction contracts - retainage -
conditions precedent.
(1) (a) A property owner, contractor, or subcontractor shall not
withhold as retainage more than five percent of the price of the work
completed under the contract or subcontract. Making a partial payment
under this subsection (1) is not acceptance or approval of some of the work
or of a waiver of defects in the work.
(b) (I) IN LIEU OF RETAINAGE, A SUBCONTRACTOR OR CONTRACTOR
MAY TENDER A RETAINAGE BOND IN AN AMOUNT NOT TO EXCEED FIVE
PERCENT OF THE MONEY EARNED BY THE SUBCONTRACTOR OR CONTRACTOR.
IF THE CONTRACTOR OR SUBCONTRACTOR TENDERS A RETAINAGE BOND
MEETING THE REQUIR EMENTS OF SUBSECTIONS ( 1 )(b )(II) AND ( 1 )(b )(Ill) OF
THIS SECTION, THE PROPERTY OWNER, CONTRACTOR, OR SUBCONTRACTOR
SHALL ACCEPT THE RET AINA GE BOND AND RELEASE THE RET AINA GE
COVERED BY THE RETAINAGE BOND.
(11) TO COMPLY WITH SUBSECTION (1 )(b )(1) OF THIS SECTION, THE
CONTRACTOR OR SUBCONTRACTOR MUST PROVIDE A RETAINAGE BOND
MEETING THE REQUIREMENTS OF SUBSECTION (l)(b)(l11) OF THIS SECTION
AND MUST:
(A) FAITHFULLY PERFORM ALL THE PROVISIONS OF THE CONTRACT
ORSUBCONTRACT;AND
PAGE 2-HOUSE BILL 26-1311
(B) PAY ALL LABORERS, SUPPLIERS, AND SUBCONTRACTORS
AMOUNTS OWED UNDER THE CONTRACT OR SUBCONTRACT.
(Ill) THE PROPERTY OWNER OR CONTRACTOR MAY REQUIRE THAT
THE AUTHORIZED SURETY HAVE A MINIMUM A.M. BEST, OR A SUCCESSOR
INSTITUTION, FINANCIAL STRENGTH RA TING, SO LONG AS THE REQUIRED
MINIMUM RATING DOES NOT EXCEED "A-". THE CONTRACTOR MAY
WITHHOLD THE SUBCONTRACTOR'S PORTION OF THE BOND PREMIUM, TO THE
EXTENT THE CONTRACTOR PROVIDES A RET AINAGE BOND TO OBTAIN A
RELEASE OF THE SUBCONTRACTOR'S RETAINAGE.
(IV) THE CONTRACTOR OR PROPERTY OWNER MUST ACCEPT A BOND
MEETING THE REQUIREMENTS OF SUBSECTION (l)(b)(III) OF THIS SECTION.
THE SUBCONTRACTOR'S OR CONTRACTOR'S BOND AND THE PROCEEDS FROM
THE BOND ARE SUBJECT TO A CLAIM AND LIEN IN THE SAME MANNER AND
PRIORITY AS SET FORTH IN ARTICLE 22 OF THIS TITLE 38.
(V) WHEN A PROPERTY OWNER ACCEPTS A BOND IN LIEU OF
RETAINAGE FROM A CONTRACTOR, THE CONTRACTOR MUST ACCEPT A LIKE
BOND FROM ANY SUBCONTRACTOR THAT SUBMITS A BOND IN LIEU OF
RETAINAGE UNDER THIS SUBSECTION (l)(b).
(VI) THIS SUBSECTION (l)(b) DOES NOT APPLY TO A CONTRACT OR
SUBCONTRACTTHA T CONCERNS PROPERTY OWNED BY A PUBLIC ENTITY. THE
EXEMPTION DESCRIBED IN THIS SUBSECTION ( 1 )(b )(VI) INCLUDES A
CONTRACT OR SUBCONTRACT THAT RESULTS FROM A PUBLIC-PRIVATE
PARTNERSHIP.
SECTION 3. Act subject to petition - effective date -
applicability. (1) This act takes effect at 12:01 a.m. on the day following
the expiration of the ninety-day period after final adjournment of the
general assembly (August 12, 2026, if adjournment sine die is on May 13,
2026); except that, if a referendum petition is filed pursuant to section 1 (3)
of article V of the state constitution against this act or an item, section, or
part of this act within such period, then the act, item, section, or part will
not take effect unless approved by the people at the general election to be
held in November 2026 and, in such case, will take effect on the date of the
official declaration of the vote thereon by the governor.
PAGE 3-HOUSE BILL 26-1311
(2) This act applies to contracts created on or after the applicable
effective date of this act.
Ju~ ~
SPEAKER OF THE HOUSE
OF REPRESENTATIVES
v~ 4
Vanessa Reilly ~
CHIEF CLERK OF THE HOUSE
OF REPRESENTATIVES
PAGE 4-HOUSE BILL 26-1311
James Rashad Coleman, Sr.
PRESIDENT OF
THE SENATE
Esther van Mourik
SECRETARY OF
THE SENATE
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