AZ SB1286

Prohibits owners from retaining payment from contractors when the construction contract requires the contractor to purchase a performance bond, unless the performance bond is required by the state, local government, or a third party.

Applies the same prohibition to contractors retaining payment from subcontractors when a performance bond is required of the subcontractor.

Amends Arizona Revised Statutes section 32-1129.01 regarding progress payments, retention, and payment timing in construction contracts.

Preserves existing exceptions allowing retention when performance bonds are mandated by government agencies or third parties as a condition of work completion.