ROBERT L. EHRLICH, JR., Governor                             Ch. 292

Article - State Finance and Procurement

Section 17-110

to be Section 17-112 17-111

Annotated Code of Maryland

(2001 Replacement Volume and 2002 Supplement)

BY adding to

Article - State Finance and Procurement

Section 17-110 and 17-111

Annotated Code of Maryland

(2001 Replacement Volume and 2002 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That Section(s) 17-110 of Article - State Finance and Procurement of
the Annotated Code of Maryland be renumbered to be Section(s) 17-112 17-111.

SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland
read as follows:

Article - State Finance and Procurement

17-110.

(A) (1) IF A CONTRACTOR HAS FURNISHED 100% PAYMENT SECURITY AND
100% PERFORMANCE SECURITY IN ACCORDANCE WITH THIS SUBTITLE UNDER A
CONTRACT FOR CONSTRUCTION AWARDED BY A PUBLIC BODY, THE PERCENTAGE
SPECIFIED IN THE CONTRACT FOR RETAINAGE MAY NOT EXCEED 5% 10% OF THE
TOTAL AMOUNT FOR THE FIRST 50% OF THE CONTRACT.

(2)      UNLESS A PUBLIC BODY DEMONSTRATES THE NEED TO RETAIN
MORE THAN 5% TO PROTECT THE PUBLIC INTEREST, AFTER 50% OF THE CONTRACT IS
COMPLETED, A PUBLIC BODY MAY RETAIN ONLY 5% OF THE TOTAL AMOUNT.

(3)      IN ADDITION TO RETAINAGE, A PUBLIC BODY MAY WITHHOLD FROM
PAYMENTS OTHERWISE DUE A CONTRACTOR ANY AMOUNT THAT THE PUBLIC BODY
REASONABLY BELIEVES NECESSARY TO PROTECT THE PUBLIC BODY'S INTEREST.

(3) RETAINAGE WITHHELD BY A PUBLIC BODY MAY BE DEPOSITED IN AN
INTEREST BEARING ESCROW ACCOUNT IN ACCORDANCE WITH § 17-111 OF THIS
SUBTITLE.

(4)     BEFORE ENTERING INTO A CONSTRUCTION CONTRACT UNDER THIS
SUBSECTION, A PUBLIC BODY SHALL REQUIRE THAT THE CONTRACT INCLUDE A
CLAUSE STATING THAT FINAL PAYMENT SHALL BE MADE TO A CONTRACTOR ONLY
AFTER THE CONTRACTOR PROVIDES WRITTEN VERIFICATION, PROVIDED BY THE
SUBCONTRACTORS UNDER THE CONTRACT, THAT THE SUBCONTRACTORS HAVE
BEEN PAID.

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