Washington State House of Representatives Office of Program Research | BILL ANALYSIS |
Capital Budget Committee |
HB 1575
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
Brief Description: Regulating retainage bonds on public contracts.
Sponsors: Representatives Buys, Dunshee, DeBolt and Stanford.
Brief Summary of Bill |
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Hearing Date: 2/6/15
Staff: Steve Masse (786-7115).
Background:
A surety bond is a promise to pay one party a certain amount if a second party fails to meet some obligation, such as fulfilling the terms of a contract.
Retainage bonds are a type of bond that protects the obligee after a construction project is complete. They guarantee that the principal contractor will carry out all necessary work to correct structural and/or other defects discovered immediately after completion of the contract, even if full payment has been made to the principal. Typically retainage ranges from 2% to 5% of the contract amount.
The Office of the Insurance Commissioner is responsible for overseeing the regulation of surety insurance. Under current law, a surety bond must be approved and accepted by a court, public official, or public body if it is proper and guaranteed by an authorized surety insurer.
Summary of Bill:
All retainage bonds that are executed, posted, or given as security are required to comply with statute. An A-minus or better rating is required for a surety insurer providing a retainage bond.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.