07RS HB490

HB490

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HB 490/LM (BR 1327) - B. Yonts, R. Webb, L. Belcher, L. Clark, C. Embry Jr, B. Farmer, R. Henderson, C. Hoffman, D. Horlander, J. Jenkins, D. Keene, A. Koenig, C. Miller, T. Moore, S. Riggs, S. Santoro, K. Upchurch

     AN ACT relating to the construction industry.
     Create new sections of KRS Chapter 371, relating to contracts; define terms relating to construction contracts; specify certain provisions that make a construction contract null, void, and unenforceable; establish time limits for payments to contractor and subcontractor; permit a contractor to recover costs resulting from delay if delay was caused by the contracting entity; cap retainage at ten percent until 50 percent of project is completed and five percent on remainder; require release of retainage within 30 days of substantial completion of a project; make provisions applicable to both public and private construction; exempt residential construction; specify that appeals relating to public construction projects shall be in Franklin Circuit Court; provide that costs and attorney fees may be awarded to the prevailing party in a dispute; make provisions effective for contracts entered into after the effective date of the Act; title the Act the Kentucky Fairness in Construction Act; and amend KRS 45A.245 and 371.160 to conform.

HB 490 - AMENDMENTS


     HCS/LM - Retain original provisions, except change interest rate on late payments from 18 percent to 15 percent; narrow definition of "substantial completion"; delete provision basing retainage on percentage of the remaining amount due to the percentage of the total contract amount; add provision limiting the awarding of attorney's fees in public construction contracts to the public contract rate; delete language specifying that venue be in Franklin Circuit Court for public construction contract disputes and in the circuit court where the property is located for nonpublic disputes; add provision to exempt contracts entered into by a borrower of funds that are provided, insured, or guaranteed by the United States Department of Agriculture's Rural Utilities Service or financed under a lien accommodation by the Rural Utilities Service.

     HFA (1, B. Yonts) - Retain original provisions, except define "disputed amount" and "undisputed amount"; delete language specifying that a contract provision is against public policy if it waives, releases, or extinguishes a contractor's or subcontractor's rights to obtain damages for delays that are within the control of someone acting on the contracting entity's behalf; clarify that interest begins to accrue upon the expiration of 30 business rather than 30 calendar days; specify that interest is imposed on the unpaid amount due the contractor and not the undisputed amount; specify that interest owed a subcontractor is imposed on the unpaid amount and not the disputed amount; specify that a contractor shall notify the contracting entity after the 25th business day when interest shall begin to accrue; redefine substantial compliance and clarify that partial occupancy and use does not automatically constitute substantial compliance; delete section allowing the contractor or subcontractor to suspend further performance on a contract until payment is made; delete language allowing the contractor or subcontractor to extend the contract time and the contract sum to cover the suspending party's reasonable costs of delay; clarify that public construction contracts whose lien rights are governed under KRS 376.250 are not subject to the mechanic's lien provided in KRS Chapter 376.

     HFA (2, B. Yonts) - Retain original provisions, except define "disputed amount" and "undisputed amount"; delete language specifying that a contract provision is against public policy if it waives, releases, or extinguishes a contractor's or subcontractor's rights to obtain damages for delays that are within the control of someone acting on the contracting entity's behalf; clarify that contracts specifying which costs are recoverable for construction delays is not against public policy; clarify that interest begins to accrue upon the expiration of 30 business rather than 30 calendar days; specify that interest is imposed on the unpaid amount due the contractor and not the undisputed amount; create an exception for board of education construction contracts; allow boards of education 45 days to pay an undisputed amount; permit a board of education to specify that interest owed a subcontractor is imposed on the unpaid amount and not the disputed amount; specify that a contractor shall notify the contracting entity after the 25th business day when interest shall begin to accrue; include as an indicator of substantial compliance satisfying the warranties and guarantees extended to the contracting party; clarify that partial occupancy and use does not automatically constitute substantial compliance; require the contracting party, contractor, and subcontractor to mutually agree upon a schedule for completion of the work necessary for release of final payment; delete section allowing the contractor or subcontractor to suspend further performance on a contract until payment is made; delete language allowing the contractor or subcontractor to extend the contract time and the contract sum to cover the suspending party's reasonable costs of delay; clarify that public construction contracts whose lien rights are governed under KRS 376.250 are not to be subject to the mechanic's lien provided in KRS Chapter 376.

     SCA (1, G. Tapp) - Amend to delete spouse of an owner from the definition of "contracting entity"; make technical clarifications; exempt contracts for construction of or relating to a facility as defined in KRS Chapter 278(Public Service Commission).

     SFA (1, J. Denton) - Amend to exempt contracts relating to construction of a facility as defined in KRS Chapter 278 (Public Service Commission).

     SFA (2, J. Denton) - Exempt health facilities under KRS Chapter 216B that enter into construction contracts from this Act.

     SFA (3, J. Denton) - Make Act applicable only to construction projects where the contracting entity and the contractor do not specifically address timely payment in the contract; delete language declaring that the waiver or release of substantive or procedural rights as to one's legal recourse, lien rights under KRS Chapter 376, or recovery of costs and damages for delays is against public policy; delete language setting out exceptions to the prohibition against waiving one's recovery for delays; delete language making the provisions of this Act applicable only to contracts entered into after the effective date of this Act and replace with language specifying that the Act is applicable only to construction projects for which work begins after the effective date of this Act.

     CCR - Cannot agree.

     FCCR (1) - Adopt the provisions of HB 490 GA, except make technical clarifications; delete "spouse" from the definition of "contracting entity"; exempt construction of or relating to a facility as defined in KRS Chapter 278; exempt a construction project in excess of $1 billion at a specific site within a 12-month period.

     FCCR (2) - Adopt the provisions of HB 490 GA with the following changes: make technical clarifications; revise definition of "construction" to exempt processing equipment used for the process of manufacturing; define "processing equipment", delete "spouse" from the definition of contracting entity, and exempt construction of or relating to a facility as defined in KRS Chapter 278.

     Feb 14-introduced in House
     Feb 16-to Licensing & Occupations (H); posted in committee
     Feb 22-reported favorably, 1st reading, to Calendar with Committee Substitute
     Feb 23-2nd reading, to Rules
     Feb 26-floor amendment (1) filed to Committee Substitute
     Feb 27-posted for passage in the Regular Orders of the Day for Wednesday, February 28, 2007
     Feb 28-floor amendment (2) filed to Committee Substitute
     Mar 1-3rd reading, passed 85-4 with Committee Substitute, floor amendment (2)
     Mar 2-received in Senate
     Mar 5-to Licensing, Occupations and Administrative Regulations (S)
     Mar 6-reported favorably, 1st reading, to Calendar
     Mar 7-2nd reading, to Rules
     Mar 8-floor amendment (1) filed
     Mar 9-recommitted to Licensing, Occupations and Administrative Regulations (S); reported favorably, to Rules with committee amendment (1) as a Consent Bill; floor amendments (2) and (3) filed ; floor amendments (2) and (3) ruled out of order ; posted for passage in the Regular Orders of the Day for Friday, March 9, 2007; 3rd reading; floor amendment (1) withdrawn ; passed 29-6 with committee amendment (1) ; received in House; posted for passage for concurrence in Senate committee amendment (1)
     Mar 12-House refused to concur in Senate committee amendment (1) ; received in Senate; posted for passage for receding from Senate committee amendment (1) ; Senate refused to recede from committee amendment (1) ; Conference Committee appointed in House and Senate; Conference Committee report filed in House and Senate; Conference Committee report adopted in House and Senate; Free Conference Committee appointed in House and Senate; Free Conference Committee report filed in House and Senate; placed in the House Orders of the Day
     Mar 26-Free Conference Committee report #1 withdrawn in Senate; Free Conference Committee report #2 filed in House and Senate; Free Conference Committee report #2 adopted in Senate; Bill passed 32-3; received in House
     Mar 27-Free Conference Committee report #2 adopted in House; Bill passed 96-0; enrolled, signed by each presiding officer; delivered to Governor
     Apr 5-signed by Governor (Acts Ch. 136)

Vote History

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