HBA-MPM H.B. 2850 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2850 By: Brimer Business & Industry 3/18/2001 Introduced BACKGROUND AND PURPOSE Currently, contractors and subcontractors may not be adequately protected from a decision by an owner who contracts for repair or improvements to withhold or delay retainage payments. Retainage is the amount of a contract payment that is not required to be paid to a contractor or subcontractor who performs labor, furnishes material, or delivers specially fabricated material within a specified time period. House Bill 2850 establishes rates at which interest accrues on retainage payments owed to contractors and subcontractors. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2850 amends the Business & Commerce Code to provide that retainage withheld under a construction contract, including a contract involving a material supplier, principally for the construction or repair of improvements to real property located in this state accrues interest at the prime rate, with an exception. The exception is that any retainage withheld after the 45th day after the work is completed accrues interest at 1-1/2 percent each month, and that the work is considered completed on the date an affidavit or notice of completion is filed and delivered or the work is actually completed if an affidavit or notice is not filed and delivered. Interest on retainage begins accruing on the date payment is due for the labor performed, material furnished, or specially fabricated material delivered. The bill specifies the time periods when interest stops accruing on retainage owed by the owner of real property or another person. The bill specifies that no provision of this bill may be waived by contract or otherwise. EFFECTIVE DATE September 1, 2001.