Ch. 173                                    2004 LAWS OF MARYLAND

17-110.

(A) SUBSECTIONS (B)(1), (2), AND (3), (C)(1) AND (2) (C), AND (D)(1) AND (2) (D) OF
THIS SECTION DO NOT APPLY TO AN ENTITY THAT COMPLIES IS REQUIRED TO
COMPLY WITH THE PROVISIONS OF § 13-225 OF THIS ARTICLE.

[(a)] (B) (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 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.

(4)     Except as provided in paragraph (5) of this subsection, within 120
days after satisfactory completion of a contract for construction, a public body shall
release any retainage due to the contractor.

(5)     If there is a dispute or contract claim between the contractor and the
public body concerning the satisfactory completion of a contract for construction, the
public body shall release the retainage to the contractor within 120 days after the
resolution of the dispute or contract claim.

[(b)] (C) (1) A contractor may not retain a percentage of payments due a
subcontractor that exceeds the percentage of payments retained by the public body.

(2) Paragraph (1) of this subsection may not be construed to prohibit a
contractor from withholding any amount in addition to retainage if the contractor
determines that a subcontractor's performance under the subcontract provides
reasonable grounds for withholding the additional amount.

[(c)] (D) (1) A subcontractor may not retain a percentage of payments due a
lower tier subcontractor that exceeds the percentage of payments retained from the
subcontractor.

(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)] (E) This section may not be construed to limit the application of the
remaining provisions of this subtitle.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2004.

Approved April 27, 2004.

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