THE NEW MASSACHUSETTS RETAINAGE LAWc.ymcdn.com/.../ASM_RETAINAGE_SEMINAR_9_15_1.pdf · THE NEW MASSACHUSETTS RETAINAGE LAW ASSOCIATED SUBCONTRACTORS OF MASSACHUSETTS ... filed suit
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Substantial Completion: “the stage in the progress of the project when the work required by the contract for construction with the project owner is sufficiently complete in accordance with the contract for construction so that the project owner may occupy or utilize the work for its intended use…”
Substantial Completion may apply to the entire project or a phase of the entire project if the prime contract expressly permits substantial completion to apply to defined phases of the project.
i.) Not later than 14 days after reaching Substantial Completion Prime Contractor must submit to Owner a Notice of Substantial Completion (statutory form) setting forth date of Substantial Completion, according to the Prime Contractor, and certified as made in good faith
ii.) Within 14 days of receipt Owner shall accept or reject Notice of Substantial Completion
◦ If Owner accepts parties proceed to punch list
Acceptance = signing Notice and delivering to Prime Contractor
◦ If Owner rejects must send written notice to Prime Contractor of rejection, with factual and contractual basis for rejection and certification that rejection made in good faith
◦ Pay-if-paid enforceable if third party is insolvent or becomes insolvent within 90 days after submission of pay application; and
◦ Party seeking to enforce pay-if-paid:
filed Notice of Contract before submission of first application for payment for on-site work Notice of Identification filed by lower tier subcontractors
filed Statement of Account within time required by M.G.L. c. 254
filed suit to enforce lien within time required by M.G.L. c. 254
pursued all reasonable legal remedies to obtain payment from third party until there is a reasonable likelihood the action will not result in obtaining payment
Miscellaneous Prime Contractor’s retainage for self-
performed work eligible for payment to same extent as Subcontractor’s retainage
Provided Owner has not declared Prime Contractor in default, Owner may not withhold the retainage of a Subcontractor (or the Prime Contractor’s proportional retainage calculated thereon) for a claim that the Owner asserts against the Prime Contractor that is not based on the performance or default of the Subcontractor.
“The terms of M.G.L. c. 149, secs. 29E and sec. 29F shall supersede any contrary or conflicting terms in the attached Contract [Subcontract; Sub-subcontract; Purchase Order].”
“The parties intend that the attached Contract [Subcontract; Sub-subcontract; Purchase Order] comply with M.G.L. c. 149, secs. 29E and 29F. Any term in the attached Contract [Subcontract; Sub-subcontract; Purchase Order] which is contrary or conflicting to M.G.L. c.149, secs. 29E or F shall be deemed re-written to the extent required to conform to M.G.L. c. 149, secs. 29E. and 29F.”
Purpose of law to set a reasonable, not to exceed, limit on the amount of retainage that may be withheld; establish an organized and timely method of closing out a project; and provide a reasonable, not to exceed, time period in which retainage must paid
Prompt flow of funds and timely close out benefits all
Statute should make routine good practices and procedures
The foregoing is intended as a general guide relating to the new Massachusetts Retainage Law. It is not legal advice and should not be considered or relied upon as a substitution for consultation with an attorney. The legal and factual issues involved in any matter vary significantly from project to project, contract to contract, jurisdiction to jurisdiction and time to time. An attorney should be consulted with respect to the contract, facts and law applicable to any specific construction law issue.