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| Public Act 095-0567 |
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AN ACT concerning construction contracts.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 1. Short title. This Act may be cited as the | ||||
Contractor Prompt Payment Act. | ||||
Section 5. Definitions. In this Act: | ||||
(a) "Payment application" means, in accordance with the | ||||
terms and definitions of
the applicable contract, any invoice, | ||||
bill or other request for periodic payment, final payment, | ||||
payment of change order or request for release of retainage | ||||
from the contractor to the owner. | ||||
(b) "Construction contract" means a contract or | ||||
subcontract, entered into after the effective date of this Act, | ||||
for the design, construction, alteration, improvement, or | ||||
repair of Illinois real property, except for contracts that | ||||
require the expenditure of public funds and contracts for the | ||||
design, construction, alteration, improvement, or repair of | ||||
single family residences or multiple family residences with 12 | ||||
or fewer units in a single building. | ||||
(c) "Contractor" and "subcontractor" shall have the | ||||
meanings ascribed to them by the Illinois Mechanics Lien Act | ||||
and cases decided under that Act. | ||||
Section 10. Construction contracts. All construction | ||
contracts shall be deemed to provide the following: | ||
(1) If a contractor has performed in accordance with the | ||
provisions of a construction contract and the payment | ||
application has been approved by the owner or the owner's | ||
agent, the owner shall pay the amount due to the contractor | ||
pursuant to the payment application not more than 15 calendar | ||
days after the approval. The payment application shall be | ||
deemed approved 25 days after the owner receives it unless the | ||
owner provides, before the end of the 25-day period, a written | ||
statement of the amount withheld and the reason for withholding | ||
payment. If the owner finds that a portion of the work not in | ||
accordance with the contract, payment may be withheld for the | ||
reasonable value of that portion only. Payment shall be made | ||
for any portion of the contract for which the work has been | ||
performed in accordance with the provisions of the contract. | ||
Instructions or notification from an owner to his or her lender | ||
or architect to process or pay a payment application does not | ||
constitute approval of the payment application under this Act. | ||
(2) If a subcontractor has performed in accordance with the | ||
provisions of his or her contract with the contractor or | ||
subcontractor and the work has been accepted by the owner, the | ||
owner's agent, or the contractor, the contractor shall pay to | ||
his or her subcontractor and the subcontractor shall pay to his | ||
or her subcontractor, within 15 calendar days of the | ||
contractor's receipt from the owner or the subcontractor's | ||
receipt from the contractor of each periodic payment, final | ||
payment, or receipt of retainage monies, the full amount | ||
received for the work of the subcontractor based on the work | ||
completed or the services rendered under the construction | ||
contract. | ||
Section 15. Interest; suspension of performance. | ||
(a) If a payment due pursuant to the provisions of this Act | ||
is not made in a timely manner, the delinquent party shall be | ||
liable for the amount of that payment, plus interest at a rate | ||
equal to 10% per annum. | ||
(b) A contractor or subcontractor who is not paid as | ||
required by this Act may, after providing 7 calendar days' | ||
written notice to the party failing to make the required | ||
payment, suspend performance of a construction contract | ||
without penalty for breach of contract, until the payment | ||
required pursuant to this Act is made. | ||
(c) The interest imposed by this Act shall not be | ||
duplicative of the interest charged under the Mechanics Lien | ||
Act.
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Section 99. Effective date. This Act shall take effect upon | ||
becoming law.
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