SB437 Summary

• Amends Alabama Code Section 8-29-3 to establish payment requirements for construction contracts, defining retainage as money or security retained by owners, contractors, or subcontractors conditioned on final project completion and acceptance.

• Requires owners to pay contractors within 30 days of receiving pay requests if no payment terms are agreed upon, and contractors must pay subcontractors within 7 days of receiving owner payment.

• Limits retainage withholding to a maximum of 10 percent of estimated work value, with no further retainage allowed after 50 percent project completion has been accomplished.

• Requires owners to release and pay retained funds to contractors within 60 days after either the contractor's work completion or substantial project completion (whichever occurs first), provided all certificates of occupancy have been issued.

• Imposes a 1 percent monthly (12 percent annual) interest penalty on any party that withholds payments in violation of the act's terms, and applies only to contracts entered into after the act's effective date.