ROBERT L. EHRLICH, JR., Governor                            S.B. 591

(2) PARAGRAPH (1) OF THIS SUBSECTION MAY NOT BE CONSTRUED TO
PROHIBIT A SUBCONTRACTOR FROM WITHHOLDING ANY AMOUNT IN ADDITION TO
RETAINAGE IF THE SUBCONTRACTOR DETERMINES THAT A LOWER TIER
SUBCONTRACTOR'S PERFORMANCE UNDER THE SUBCONTRACT PROVIDES
REASONABLE GROUNDS FOR WITHHOLDING THE ADDITIONAL AMOUNT.

(D)     IF RETAINAGE HAS BEEN PLACED IN ESCROW UNDER § 17-111 OF THIS
SUBTITLE, EACH PAYMENT OF RETAINAGE SHALL INCLUDE A PRO RATA PORTION OF
INTEREST EARNED.

(E)     THIS SECTION MAY NOT BE CONSTRUED TO LIMIT THE APPLICATION OF
THE REMAINING PROVISIONS OF THIS SUBTITLE.

17-111.

(A) THIS SECTION DOES NOT APPLY TO ANY PROCUREMENT CONTRACT
FUNDED WITH TAX EXEMPT FINANCING.

(B) (1) SUBJECT TO THE REQUIREMENTS OF THIS SECTION, A CONTRACTOR
UNDER A PROCUREMENT CONTRACT THAT A PUBLIC BODY AWARDS FOR
CONSTRUCTION IS ENTITLED TO HAVE RETAINAGE UNDER THE PROCUREMENT
CONTRACT PLACED IN AN ESCROW ACCOUNT IF THE CONTRACTOR:

(I) ELECTS THAT PROCEDURE IN THE PROCUREMENT CONTRACT
IN THE SPACE PROVIDED FOR THAT ELECTION; AND

(II) SUBMITS TO THE PUBLIC BODY AN ESCROW AGREEMENT THAT
MEETS THE REQUIREMENTS OF SUBSECTION (C) OF THIS SECTION.

(2) THE PROCUREMENT CONTRACT SHALL IDENTIFY THE ESCROW
AGENT.

(C) THE ESCROW AGREEMENT SHALL:

(1) BE ON A FORM THAT THE PUBLIC BODY PROVIDES;

(2) INCLUDE THE COMPLETE ADDRESS OF BOTH THE ESCROW AGENT
AND THE SURETY;

(3) AUTHORIZE THE PUBLIC BODY TO PAY RETAINAGE TO THE ESCROW
AGENT; AND

(4) BE SIGNED BY:

(I) THE CONTRACTOR;

(II) THE SURETY FOR THE CONTRACTOR; AND

(III) THE ESCROW AGENT.

(D) ON COMPLIANCE WITH THE REQUIREMENTS OF SUBSECTION (B) OF THIS
SECTION, THE PUBLIC BODY SHALL PAY THE RETAINAGE TO THE ESCROW AGENT
UNLESS:

- 3425 -