Senate Bill No. 1121 Summary

• Establishes the "Construction Payment Act" requiring all private commercial construction contracts to include mandatory payment clauses, funding statements, and 12% annual interest penalties on wrongfully withheld payments.

• Mandates owners pay contractors within 30 days of billing period end, and contractors pay subcontractors/suppliers within 7 days of receiving owner payment, with 12% annual interest on late payments that compounds every 30 days.

• Requires disputed payments be placed in federally insured interest-bearing escrow accounts after 30 days of unresolved disputes, with verification provided within 10 days of request.

• Voids contract provisions requiring contractors to assume owner non-payment risk, waive litigation rights, rely solely on owner credit, use non-Michigan dispute resolution, or waive act protections.

• Excludes public works and residential projects (single units, duplexes/triplexes, condominiums) but applies to commercial buildings, apartments with 7+ units, hotels, retail, industrial, and mixed-use properties.