PETITION OF:

Amend chapter 149 of the 2004 Official Edition by inserting the following section 29 E after 29D.

SECTION 1.

(a) Sections 1 through 7, and amendments thereto, shall be known as the Massachusetts fairness in private construction contract act.

(b) The rights and duties prescribed by this act shall not be waivable or varied under the terms of a contract. The terms of any contract waiving the rights and duties prescribed by this act shall be void and unenforceable.

SECTION 2. Definitions.

As used in this act:

(a) ‘‘Construction’’ means the whole or the part of the erection, alteration, repair or removal of a building, structure or other improvement to real property, whether underground or above ground, or the furnishing of material or rental equipment, appliances or tools therefor.

(b) ‘‘Contract’’ means a written agreement concerning construction made and entered into by and between an owner and a contractor, a contractor and a subcontractor or a subcontractor and another subcontractor, including all plans, specifications and addenda relating thereto.

(d) ‘‘Owner’’ means a person who owns any interest in real property, or a person who enters into a contract for construction for, on behalf of, or with the consent of such owner.

(e) ‘‘Person’’ means an individual, corporation, estate, trust, partnership, limited liability company, association, organization, joint venture or any other legal entity.

(f) ‘‘Retainage’’ means money earned by a contractor or subcontractor but withheld to ensure proper performance by the contractor or subcontractor.

(g) ‘‘Subcontractor’’ means any person performing construction covered by a contract between an owner and a contractor but not having a contract with the owner.

(h) “Days” means calendar days unless otherwise stated.

SECTION 3. Payment Requirements; Disputed Amounts; Penalties .

(a) All persons who enter into a contract for private construction after the effective date of this act, shall make all payments pursuant to the terms of the contract, which shall be in accordance with the provisions of subsections (b), (c), (d), (e), (f), (g), (h) and (i) and sections 4 through 7, inclusive, and amendments thereto.

Specific billing cycle and payment schedule required

(b) All contracts for private construction anticipated to last more than 60 days shall provide for a specific billing cycle and payment schedule, under which all payments shall be made by the owner, contractor and subcontractors for work performed during the preceding billing cycle.

Right to withhold disputed amounts; penalty for claims made in bad faith

(c) Nothing in this statute shall prevent an owner, contractor or subcontractor from withholding from payment under a construction contract, disputed amounts that are equal in value to any good faith claim(s) against the contractor or subcontractor who submitted the request for payment. An owner, contractor or subcontractor who is found to have withheld payments for disputed amounts on account of claims made in bad faith against the contractor or subcontractor who submitted the request for payment, shall be subject to the provisions of c.93A.

Payments by owner, for all work including changes in the work, to be approved and paid timely

(d) All contracts for private construction shall provide that requests for payment that are submitted to the owner timely and properly completed shall be approved and certified within a specific time stated in the contract, and shall be deemed approved and certified in that time unless within that time the owner or owner’s representative issues a written statement detailing the amounts in the request for payment that are not approved and the reasons therefor. Failure by the owner to issue a written order for changes in the work performed at the direction of the owner shall not be a reason to disapprove a request for payment for work performed on said changes. All contracts shall further provide that payment of all undisputed amounts due a contractor from an owner, except retainage, shall be made within a specific time following receipt of the request for payment or following approval and certification of the amounts due.

Penalties for failure to pay

(e) If the owner fails to pay a contractor all undisputed amounts due within the time stated in the contract, the owner shall pay interest to the contractor on the undisputed amounts beginning on the day after the last date payment was due, computed at the legal rate, as provided in c.231 §6(c). In addition, if the owner fails to pay a contractor undisputed amounts for changes in the work within the billing cycle that follows the billing cycle in which the owner received a timely, properly completed request for payment, the contractor shall not be required to perform additional changes in the work until said amounts are paid in full, and shall not be held in breach of contract.

Payment to subcontractors to be made within 7 days

(f) A contractor shall pay its subcontractors all undisputed amounts due within seven business days of receipt of payment from the owner, including payment of retainage if retainage is released by the owner, if the subcontractor has provided a timely, properly completed request for payment to the contractor. A subcontractor’s timely and properly completed request for payment to a contractor shall be included in the contractor’s next requisition to the owner unless the contractor, within a reasonable time stated in the contract, issues a written statement detailing the amounts that will not be included in the requisition and the reasons therefor. Failure by an owner or a contractor to issue a written order for changes in the work performed at the direction of the owner or contractor shall not be a reason to disapprove a request for payment for work performed on said changes.

Owner to notify subcontractors of payments made

(g) On the written request of a subcontractor, the owner shall notify the subcontractor within five days after the issuance of a payment to the contractor.

Penalties for failure to pay

(h) If the contractor fails to pay a subcontractor all undisputed amounts within seven business days after receipt from the owner, the contractor shall pay interest to the subcontractor on the undisputed amount beginning on the eighth business day after receipt of payment by the contractor, computed at the legal rate, as provided in c.231 §6(c). In addition, if the contractor fails to pay a subcontractor undisputed amounts for changes in the work within the billing cycle that follows the billing cycle in which the contractor received a timely, properly completed request for payment, the subcontractor shall not be required to perform additional changes in the work until said amounts are paid in full, and shall not be held in breach of contract.

Payment provisions apply to sub-subcontractors

(i) The provisions of subsections (f) and (g) and (h) shall apply to all payments from subcontractors to their subcontractors.

Section 4. Suspension or Termination of Work; Notice Requirements.

(a) If any undisputed payment is not made within seven business days after the payment date established in the contract, the contractor and any subcontractors, regardless of tier, upon seven additional business days’ written notice to the owner and, in the case of a subcontractor, written notice to the contractor, shall, without prejudice to any other available remedy, be entitled to suspend further performance until payment, including applicable interest, is made. The contract time for each contract affected by the suspension shall be extended appropriately and the contract sum for each affected contract shall be increased by the suspending party’s reasonable costs of demobilization, delay and remobilization.

(b) If performance is suspended for more than 30 days for failure to receive payment, the contractor and any subcontractors, upon seven additional business days’ written notice to the owner and, in the case of a subcontractor, written notice to the contractor, may terminate the contract and may not be deemed in breach of the contract.

(c) Written notice required under this section shall be deemed to have been provided if the notice is delivered in person or is delivered by certified mail, return receipt requested, or other means that provides written, third-party verification of delivery.

SECTION 5. Provisions against public policy.

Any provision in a contract for private construction that purports to waive, release or extinguish the right to resolve disputes through litigation in court or substantive or procedural rights in connection with such litigation, shall be against public policy and shall be void and unenforceable, except that a contract may require binding arbitration as a substitute for litigation or require non-binding alternative dispute resolution as a prerequisite to litigation, provided, however, that any such requirement for binding arbitration or non-binding alternative dispute resolution must be mutual and not subject to subsequent exercise or waiver by one of the contracting parties.

Section 6. Venue for Action; Right to Attorney Fees.

In any action arising out of or related to the contract, including arbitration or alternative dispute resolution proceeding, the venue for such action shall be the commonwealth of Massachusetts, and any provision in a construction contract that requires such action to be conducted under the laws of a state other than Massachusetts shall be void. In any such action, successful claimants shall be awarded costs and reasonable attorney fees as determined by the court.

Section 7. Application of the law.

The provisions of this act shall apply to all construction in the commonwealth of Massachusetts, except:

(a) single family residential housing and multifamily residential housing of four units or less.

(b) public construction projects

(c) construction projects funded in part by governmental sources of funding where governmental procurement requirements conflict with the requirements of this act.

(d) contracts entered into prior to the effective date of this act.