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Senate
File
431
-
Introduced
SENATE
FILE
431
BY
BOUSSELOT
A
BILL
FOR
An
Act
relating
to
retention
of
fees
for
public
improvement
1
contracts.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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431
Section
1.
Section
573.7,
Code
2025,
is
amended
by
adding
1
the
following
new
subsections:
2
NEW
SUBSECTION
.
3.
After
a
claim
has
been
filed,
upon
the
3
general
contractor
filing
with
the
public
corporation
or
person
4
withholding
the
funds
a
surety
bond
in
double
the
amount
of
the
5
claim
in
controversy,
conditioned
to
pay
any
final
judgment
6
rendered
for
the
claim
so
filed,
the
public
corporation
or
7
person
withholding
the
funds
shall
pay
to
the
contractor
the
8
full
amount
of
retention
held
for
the
project
or
double
the
9
amount
of
the
claim,
whichever
is
less.
Payment
shall
be
made
10
to
the
contractor
within
twenty
days
of
receipt
by
the
public
11
corporation
of
the
surety
bond.
Failure
to
make
payment
by
12
that
date
shall
cause
interest
to
accrue
on
the
unpaid
amount
13
during
the
period
commencing
on
the
twenty-first
day
after
the
14
public
corporation’s
receipt
of
the
surety
bond
and
ending
on
15
the
date
of
payment.
The
rate
of
interest
shall
be
determined
16
pursuant
to
section
573.14,
subsection
2.
This
subsection
is
17
not
subject
to
or
limited
by
section
573.14,
subsection
1,
or
18
section
573.16
or
573.28.
19
NEW
SUBSECTION
.
4.
Upon
written
demand
of
the
contractor
20
served,
in
the
manner
prescribed
for
original
notices,
on
the
21
person
filing
a
claim,
requiring
the
claimant
to
commence
22
action
in
court
to
enforce
the
claim,
an
action
shall
be
23
commenced
within
thirty
days.
The
claim
is
barred
if
an
action
24
is
not
commenced
within
thirty
days.
Upon
the
claim
being
25
barred,
the
public
corporation
or
person
withholding
the
funds
26
shall
pay
to
the
contractor
the
full
amount
of
retention
held
27
for
the
project
or
double
the
amount
of
the
claim,
whichever
is
28
less.
Payment
shall
be
made
to
the
contractor
within
twenty
29
days
of
receipt
by
the
public
corporation
of
a
payment
demand
30
by
the
contractor
accompanied
by
copies
of
the
written
demand
31
and
proof
of
service
upon
the
person
filing
the
claim.
Failure
32
to
make
payment
within
twenty
days
shall
cause
interest
to
33
accrue
on
the
unpaid
amount,
commencing
on
the
twenty-first
34
day
after
the
date
of
the
public
corporation’s
receipt
of
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the
payment
demand
by
the
contractor
with
the
accompanying
1
documents
and
ending
on
the
date
of
the
payment.
The
rate
2
of
interest
shall
be
determined
pursuant
to
section
573.14,
3
subsection
2.
This
subsection
is
not
subject
to
or
limited
by
4
section
573.14,
subsection
1,
or
section
573.16
or
573.28.
5
Sec.
2.
Section
573.12,
subsection
1,
Code
2025,
is
amended
6
by
adding
the
following
new
paragraph:
7
NEW
PARAGRAPH
.
c.
At
any
time,
a
principal
contractor
may
8
post
with
the
public
corporation
a
retention
bond,
with
surety,
9
in
the
amount
of
five
percent
of
the
original
contract
price
10
to
serve
as
a
substitute
for
the
retention
funds.
Upon
the
11
public
corporation’s
receipt
of
the
retention
bond,
the
public
12
corporation
shall
pay
to
the
contractor
all
retention
funds
13
being
held,
if
any,
and
shall
not
hold
any
further
retention
14
funds
on
the
project.
Payment
shall
be
made
to
the
contractor
15
within
twenty
days
of
receipt
by
the
public
corporation
of
the
16
retention
bond.
Failure
to
make
payment
within
twenty
days
17
shall
cause
interest
to
accrue
on
the
unpaid
amount
beginning
18
on
the
twenty-first
day
after
the
public
corporation’s
receipt
19
of
the
retention
bond
and
ending
on
the
date
of
the
payment.
20
The
rate
of
interest
shall
be
determined
pursuant
to
section
21
573.14,
subsection
2.
This
paragraph
is
not
subject
to
or
22
limited
by
section
573.14,
subsection
1,
or
section
573.16
or
23
573.28.
24
Sec.
3.
Section
573.14,
Code
2025,
is
amended
to
read
as
25
follows:
26
573.14
Retention
of
unpaid
funds.
27
1.
The
Except
as
otherwise
provided
in
this
chapter,
the
28
fund
provided
for
in
section
573.13
shall
be
retained
by
the
29
public
corporation
for
a
period
of
thirty
days
after
the
30
completion
and
final
acceptance
of
the
improvement.
If
at
the
31
end
of
the
thirty-day
period
claims
are
on
file,
the
public
32
corporation
shall
continue
to
retain
from
the
unpaid
funds
a
33
sum
equal
to
double
the
total
amount
of
all
claims
on
file.
The
34
remaining
balance
of
the
unpaid
fund,
or
if
no
claims
are
on
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431
file,
the
entire
unpaid
fund,
shall
be
released
and
paid
to
the
1
contractor.
2
2.
The
public
corporation
shall
order
payment
of
any
3
amount
due
the
contractor
to
be
made
in
accordance
with
the
4
terms
of
the
contract.
Except
as
provided
in
section
573.12
5
for
progress
payments,
failure
to
make
payment
pursuant
to
6
this
section
,
of
any
amount
due
the
contractor,
within
forty
7
days,
unless
a
greater
time
period
not
to
exceed
fifty
days
8
is
specified
in
the
contract
documents,
after
the
work
under
9
the
contract
has
been
completed
and
if
the
work
has
been
10
accepted
and
all
required
materials,
certifications,
and
other
11
documentations
required
to
be
submitted
by
the
contractor
and
12
specified
by
the
contract
have
been
furnished
the
awarding
13
public
corporation
by
the
contractor,
shall
cause
interest
14
to
accrue
on
the
amount
unpaid
to
the
benefit
of
the
unpaid
15
party.
Interest
shall
accrue
during
the
period
commencing
16
the
thirty-first
day
following
the
completion
of
work
and
17
satisfaction
of
the
other
requirements
of
this
subsection
and
18
ending
on
the
date
of
payment.
The
rate
of
interest
shall
be
19
determined
by
the
period
of
time
during
which
interest
accrues,
20
and
shall
be
the
same
as
the
rate
of
interest
that
is
in
effect
21
under
section
12C.6
,
as
of
the
day
interest
begins
to
accrue,
22
for
a
deposit
of
public
funds
for
a
comparable
period
of
time.
23
However,
for
institutions
governed
pursuant
to
chapter
262
,
24
the
rate
of
interest
shall
be
determined
by
the
period
of
time
25
during
which
interest
accrues,
and
shall
be
calculated
as
the
26
prime
rate
plus
one
percent
per
year
as
of
the
day
interest
27
begins
to
accrue.
This
subsection
does
not
abridge
any
of
the
28
rights
set
forth
in
section
573.16
elsewhere
in
this
chapter
.
29
Except
as
provided
in
sections
573.7,
573.12
,
and
573.16
30
573.28
,
interest
shall
not
accrue
on
funds
retained
by
the
31
public
corporation
to
satisfy
the
provisions
of
this
section
32
regarding
claims
on
file.
This
chapter
does
not
apply
if
the
33
public
corporation
has
entered
into
a
contract
with
the
federal
34
government
or
accepted
a
federal
grant
which
that
is
governed
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by
federal
law
or
rules
that
are
contrary
to
the
provisions
of
1
this
chapter
.
For
purposes
of
this
subsection
,
“prime
rate”
2
means
the
prime
rate
charged
by
banks
on
short-term
business
3
loans,
as
determined
by
the
board
of
governors
of
the
federal
4
reserve
system
and
published
in
the
federal
reserve
bulletin.
5
Sec.
4.
Section
573.16,
subsection
2,
Code
2025,
is
amended
6
by
striking
the
subsection.
7
Sec.
5.
Section
573.21,
Code
2025,
is
amended
to
read
as
8
follows:
9
573.21
Attorney
fees.
10
The
court
may
shall
tax,
as
costs,
a
reasonable
attorney
11
fee
in
favor
of
any
claimant
under
section
573.7
for
labor
or
12
materials
who
has,
in
whole
or
in
part,
established
prevails
on
13
a
claim.
The
court
shall
tax,
as
costs,
a
reasonable
attorney
14
fee
in
favor
of
any
principal
contractor
who
prevails,
in
whole
15
or
in
part,
in
any
dispute
with
the
public
corporation
related
16
to
or
arising
out
of
the
contract,
retention
funds,
or
the
17
public
improvement.
18
EXPLANATION
19
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
20
the
explanation’s
substance
by
the
members
of
the
general
assembly.
21
This
bill
relates
to
retention
fees
and
bonds
for
public
22
improvement
contracts.
23
The
bill
provides
that
after
a
claim
has
been
filed
for
costs
24
incurred
in
the
construction
of
a
public
improvement
and
the
25
general
contractor
has
filed
a
surety
bond
in
double
the
amount
26
of
the
claim
in
controversy
with
a
public
corporation
or
person
27
withholding
funds,
the
public
corporation
or
person
must
pay
to
28
the
contractor
the
full
amount
of
retention
funds
held
for
the
29
project
or
double
the
amount
of
the
claim,
whichever
is
less.
30
Interest
will
accrue
on
the
unpaid
amount
beginning
on
the
21st
31
day
after
the
public
corporation’s
receipt
of
the
surety
bond.
32
The
bill
requires
that
after
the
contractor
serves
a
33
written
demand
on
the
person
filing
a
claim,
an
action
must
34
be
commenced
within
30
days,
or
the
claim
will
be
barred
and
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431
the
public
corporation
or
person
withholding
the
funds
must
1
pay
the
contractor
the
full
amount
of
retention
funds
held
for
2
the
project
or
double
the
amount
of
the
claim,
whichever
is
3
less.
Beginning
on
the
21st
day
after
the
public
corporation’s
4
receipt
of
a
payment
demand
by
the
contractor
with
the
5
accompanying
documents,
interest
shall
accrue
on
the
unpaid
6
amount.
7
The
bill
allows
a
principal
contractor
to
post
with
the
8
public
corporation
a
retention
bond,
with
surety,
in
the
amount
9
of
5
percent
of
the
original
contract
price
as
a
substitute
for
10
the
retention
funds
that
are
retained
by
a
public
corporation
11
from
each
monthly
payment
for
labor
and
material
on
a
public
12
improvement
contract.
The
public
corporation
must
pay
all
13
retention
funds
being
held
to
the
contractor
within
20
days
14
and
hold
no
further
retention
funds
on
the
project.
Beginning
15
on
the
21st
day
after
the
public
corporation’s
receipt
of
the
16
retention
bond,
interest
shall
accrue
on
the
unpaid
amount
of
17
the
retention
funds.
18
The
bill
strikes
the
requirement
that
the
retained
and
19
unpaid
funds
owed
to
the
contractor
be
released
if
an
action
20
is
not
commenced
within
30
days
of
the
contractor
serving
21
written
demand
on
the
person
filing
a
claim
and
that
the
public
22
corporation
or
person
pay
the
contractor
the
withheld
funds
23
after
an
action
is
commenced
and
the
general
contractor
has
24
filed
a
surety
bond.
25
Under
current
law,
a
court
may
grant
a
reasonable
attorney
26
fee
to
a
claimant
who
has
established
a
claim.
The
bill
27
changes
this
to
require
a
court
to
grant
a
reasonable
attorney
28
fee
to
a
claimant
who
prevails
and
to
a
principal
contractor
29
who
prevails
in
a
dispute
with
a
public
corporation
related
to
30
the
contract,
retention
funds,
or
the
public
improvement.
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