Magazine article Business Credit

Sweeping New Law Addresses Payment Problems in Kansas Construction Industry

Magazine article Business Credit

Sweeping New Law Addresses Payment Problems in Kansas Construction Industry

Article excerpt

For specialty trade contractors, general contractors and at-risk construction managers that perform work in Kansas, the business environment changed quietly but dramatically on April 18, 2005. On that date, Kansas Gov. Kathleen Sebelius (D) signed into law the Fairness in Private Construction Contract Act (S.B. 33), legislation addressing some of the most serious problems that cause tensions among firms that work together on construction projects: stow payment, nonpayment, and out-of-state Litigation. The law, which applies to private construction and was spearheaded by the ASA-Greater Kansas City Chapter, passed with over-whelming majorities in the Kansas House (101-22) and Senate (36-3).

"Enactment of any one of the major provisions of this law would have been an extraordinary improvement for the Kansas construction industry, but this law contains so many advances, it truly is a rare gem," said ASA-Greater Kansas City Vice President of Government Relations William Miller, Building Erection Services, Olathe, KS. "There are too many disputes on construction projects, and this law helps remove some of the main reasons that these disputes happen, such as contracts that make subcontractors continue to work long after payments to them are late. The ultimate beneficiaries of the law are the construction users, who will work and live in buildings entangled in fewer unnecessary disputes and lawsuits."

The law, which applies to private construction contracts (except single-family and small multifamily residential contracts) will take effect on July 1, 2005, providing that:

* A contingent payment contract clause has no effect on the right of a contractor or subcontractor to file a mechanic's lien or payment bond claim.

* A construction owner must pay a first-tier contractor within 30 days of receiving a proper invoice for undisputed, completed work (except retainage). …

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