First Substitute H.B. 272

Representative Brian S. King proposes the following substitute bill:

1 CONSTRUCTION TRADES LICENSING ACT
2 AMENDMENTS
3 2010 GENERAL SESSION
4 STATE OF UTAH
5 Chief Sponsor: Brian S. King
6 Senate Sponsor: ____________
7
8 LONG TITLE
9 General Description:
10 This bill amends the Construction Trades Licensing payment provisions.
11 Highlighted Provisions:
12 This bill:
13 . requires a contractor, subcontractor, or supplier to hold certain construction funds in
14 trust;
15 . establishes provisions governing the funds held in trust and payment of those funds;
16 and
17 . makes technical corrections.
18 Monies Appropriated in this Bill:
19 None
20 Other Special Clauses:
21 None
22 Utah Code Sections Affected:
23 AMENDS:
24 58-55-603, as renumbered and amended by Laws of Utah 1994, Chapter 181
25

26 Be it enacted by the Legislature of the state of Utah:
27 Section 1. Section 58-55-603 is amended to read:
28 58-55-603. Payment to subcontractors and suppliers.
29 (1) (a) [When a] A contractor, subcontractor, or supplier who receives [any]
30 construction funds from an owner [or another contractor], lender, contractor, subcontractor, or
31 supplier for work performed and billed[, he shall pay each of his subcontractors and suppliers]
32 shall, for each subcontractor or supplier with whom the contractor, subcontractor, or supplier is
33 in privity of contract:
34 (i) hold the construction funds in trust; and
35 (ii) pay each subcontractor and supplier in proportion to the percentage of the work
36 [they] the subcontractor performed or goods the supplier provided under that billing, to the
37 extent the subcontractor or supplier is legally entitled to the funds, unless otherwise agreed by
38 contract.
39 (b) A contractor, subcontractor, or supplier under Subsection (1)(a) may create a
40 separate construction fund trust account.
41 [(2) If, under this section and without reasonable cause, or unless otherwise agreed by
42 contract,]
43 (2) (a) Subject to Subsection (2)(b) and unless otherwise agreed by contract, a
44 contractor, subcontractor, or supplier shall pay a subcontractor or supplier, in addition to a
45 payment described in Subsection (1):
46 (i) 1% interest per month of the outstanding amount due;
47 (ii) reasonable costs of any collection; and
48 (iii) a reasonable attorney fee.
49 (b) Subsection (2)(a) does not apply unless the contractor, subcontractor, or supplier
50 fails to pay for work performed by [his subcontractors or suppliers within] a subcontractor or
51 supplier by the later of:
52 (i) 30 [consecutive] calendar days after receiving construction funds from [the] an
53 owner, lender, or another contractor for work performed and billed[, or after]; and
54 (ii) the last day payment is due under the terms of the [billing, whichever is later, he
55 shall pay to the subcontractor or supplier, in addition to the payment, interest in the amount of
56 1% per month of the amount due, beginning on the day after payment is due, and reasonable

57 costs of any collection and attorney's fees] contract.
58 [(3) When a subcontractor receives any construction payment under this section,
59 Subsections (1) and (2) apply to that subcontractor.]
60 (3) It is a defense to a claim based on a failure to pay funds held in trust under this
61 section that the failure to pay is based on a good faith belief that the claimant is not legally
62 entitled to the funds.