AN ACT
Relating to the retained percentage from a public works contract held in trust
for labor and material liens and for the protection of the owner; and amending
RCW 60.28.010.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. RCW
60.28.010 and 1986 c 181 s 6 are each amended to read as follows:
(1) ((Contracts
for public improvements or work, other than for professional services, by the
state, or any county, city, town, district, board, or other public body, herein
referred to as "public body", shall provide, and there shall be
reserved by the public body from the moneys earned by the contractor on
estimates during the progress of the improvement or work, a sum not to exceed
five percent, said sum to be retained by the state, county, city, town,
district, board, or other public body,)) Public improvement contracts
shall provide, and public bodies shall reserve, a contract retainage not to
exceed five percent of the moneys earned by the contractor as a trust fund
for the protection and payment of: (a) The claims of any person ((or
persons, mechanic, subcontractor or materialman who shall perform any labor
upon such contract or the doing of said work, and all persons who shall supply
such person or persons or subcontractors with provisions and supplies for the
carrying on of such work, and)) arising under the contract; and (b)
the state with respect to taxes imposed pursuant to Title 82 RCW which may be
due from such contractor.
(2)
Every person performing labor or furnishing supplies toward the completion of
((said improvement or work)) a public improvement contract shall
have a lien upon ((said moneys so reserved)) moneys reserved by a
public body under the provisions of a public improvement contract:
PROVIDED, That such notice of the lien of such claimant shall be given ((in
the manner and within the time)) as provided in RCW 39.08.030 ((as
now existing and in accordance with any amendments that may hereafter be made
thereto: PROVIDED FURTHER, That the board, council, commission, trustees,
officer or body acting for the state, county or municipality or other public
body; (a) at any time after fifty percent of the original contract work has
been completed, if it finds that satisfactory progress is being made, may make
any of the partial payments which would otherwise be subsequently made in full;
but in no event shall the amount to be retained be reduced to less than five
percent of the amount of the moneys earned by the contractor: PROVIDED, That)).
(3)
The contractor at any time may request ((that)) the
contract retainage be reduced to one hundred percent of the value of the
work remaining on the project((; and (b))). Thirty days after
completion and acceptance of all contract work other than landscaping, a
public body may release and pay in full the amounts retained during the
performance of the contract (other than continuing retention of five percent of
the moneys earned for landscaping) subject to the provisions of RCW 60.28.020.
(((2)))
(4) The moneys reserved ((under the provisions of subsection (1) of
this section,)) by a public body under the provisions of a public
improvement contract, at the option of the contractor, shall be:
(a)
Retained in a fund by the public body until thirty days following the final
acceptance of said improvement or work as completed;
(b)
Deposited by the public body in an interest bearing account in a bank, mutual
savings bank, or savings and loan association, not subject to withdrawal until
after the final acceptance of said improvement or work as completed, or until
agreed to by both parties: PROVIDED, That interest on ((such account)) moneys
reserved by a public body under the provision of a public improvement contract
shall be paid to the contractor;
(c)
Placed in escrow with a bank or trust company by the public body until thirty
days following the final acceptance of said improvement or work as completed.
When the moneys reserved are to be placed in escrow, the public body shall
issue a check representing the sum of the moneys reserved payable to the bank
or trust company and the contractor jointly. Such check shall be converted
into bonds and securities chosen by the contractor and approved by the public
body and such bonds and securities shall be held in escrow. Interest on such
bonds and securities shall be paid to the contractor as the said interest accrues.
(((3)))
(5) The contractor or subcontractor may withhold payment of not more
than five percent from the moneys earned by any subcontractor or
sub-subcontractor or supplier contracted with by the contractor to provide
labor, materials, or equipment to the public project. Whenever the contractor
or subcontractor reserves funds earned by a subcontractor or sub-subcontractor
or supplier, the contractor or subcontractor shall pay interest to the
subcontractor or sub-subcontractor or supplier at a rate equal to that received
by the contractor or subcontractor from reserved funds.
(((4)))
(6) With the consent of the public body the contractor may submit a bond
for all or any portion of the ((amount of funds retained by the public body))
contract retainage in a form acceptable to the public body. Such bond
and any proceeds therefrom shall be made subject to all claims and liens and in
the same manner and priority as set forth for retained percentages in this
chapter. The public body shall release the bonded portion of the retained
funds to the contractor within thirty days of accepting the bond from the
contractor. Whenever a public body accepts a bond in lieu of retained funds
from a contractor, the contractor shall accept like bonds from any subcontractors
or suppliers from which the contractor has retained funds. The contractor
shall then release the funds retained from the subcontractor or supplier to the
subcontractor or supplier within thirty days of accepting the bond from the
subcontractor or supplier.
(((5)))
(7) If the public body administering a contract, after a substantial
portion of the work has been completed, finds that an unreasonable delay will
occur in the completion of the remaining portion of the contract for any reason
not the result of a breach thereof, it may, if the contractor agrees, delete
from the contract the remaining work and accept as final the improvement at the
stage of completion then attained and make payment in proportion to the amount
of the work accomplished and in such case any amounts retained and accumulated
under this section shall be held for a period of thirty days following such
acceptance. In the event that the work shall have been terminated before final
completion as provided in this section, the public body may thereafter enter
into a new contract with the same contractor to perform the remaining work or
improvement for an amount equal to or less than the cost of the remaining work
as was provided for in the original contract without advertisement or bid. The
provisions of this chapter 60.28 RCW shall be deemed exclusive and shall
supersede all provisions and regulations in conflict herewith.
(((6)))
(8) Whenever the department of transportation has contracted for the
construction of two or more ferry vessels, thirty days after completion and
final acceptance of each ferry vessel, the department may release and pay in
full the amounts retained in connection with the construction of such vessel
subject to the provisions of RCW 60.28.020: PROVIDED, That the department of
transportation may at its discretion condition the release of funds retained in
connection with the completed ferry upon the contractor delivering a good and
sufficient bond with two or more sureties, or with a surety company, in the
amount of the retained funds to be released to the contractor, conditioned that
no taxes shall be certified or claims filed for work on such ferry after a
period of thirty days following final acceptance of such ferry; and if such
taxes are certified or claims filed, recovery may be had on such bond by the
department of revenue and the materialmen and laborers filing claims.
(((7)))
(9) Except as provided in subsection (1) of this section, reservation by a
public body for any purpose from the moneys earned by a contractor by
fulfilling its responsibilities under public improvement contracts is
prohibited.
(10)
Contracts on projects funded in whole or in part by farmers home administration
and subject to farmers home administration regulations shall not be subject to
subsections (1) through (((6))) (9) of this section.
(11)
Unless the context clearly requires otherwise, the definitions in this
subsection apply throughout this section.
(a)
"Contract retainage" means an amount reserved by a public body from
the moneys earned by a person under a public improvement contract.
(b)
"Person" means a person or persons, mechanic, subcontractor, or
materialperson who performs labor or provides materials for a public
improvement contract, and any other person who supplies the person with
provisions or supplies for the carrying on of a public improvement contract.
(c)
"Public body" means the state, or a county, city, town, district,
board, or other public body.
(d)
"Public improvement contract" means a contract for public
improvements or work, other than for professional services.
