2014 Kentucky Revised Statutes CHAPTER 371 - FORMALITY AND ASSIGNABILITY OF CONTRACTS -- INSTALLMENT SALES CONTRACTS 371.410 Retainage that may be withheld -- Release of retainage -- Substantial completion.
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371.410 Retainage that may be withheld -- Release of retainage -- Substantial
completion.
(1)
(2)
(3)
Notwithstanding any provision of the Kentucky Revised Statutes to the
contrary, until fifty percent (50%) of the construction project has been
completed in accordance with the contract, a contracting entity, contractor, or
subcontractor may withhold no more than ten percent (10%) retainage from the
amount of any undisputed payment due, and retainage held after fifty-one
percent (51%) of the construction project has been completed shall not be
more than five percent (5%) of the total contract amount.
Within thirty (30) days after substantial completion of a construction project, the
contracting entity or contractor shall release the retainage less an amount
equal to two hundred percent (200%) of the contracting entity's reasonably
estimated cost of the balance of any contractor's or subcontractor's
contractually obligated, yet uncompleted, work remaining. The contracting
entity's agent shall determine the reasonably estimated cost due under this
subsection. The contracting entity, contractor, and any subcontractor with work
yet to be completed shall mutually agree with the schedule for completion of
the work necessary for release of final payment. Within fifteen (15) business
days after the retainage has been released by the contracting entity to the
contractor, the contractor shall release to the subcontractors their proportional
shares of the retainage. For purposes of this subsection, "substantial
completion" is the point at which, as certified in writing by the contracting entity,
a project is at the level of completion, in strict compliance with the contract,
where:
(a) Necessary approval by public regulatory authorities has been given;
(b) The owner has received all required warranties and documentation; and
(c) The owner may enjoy beneficial use or occupancy and may use, operate,
and maintain the project in all respects, for its intended purpose.
Partial use or occupancy shall not necessarily result in the project being
deemed substantially complete and shall not be evidence of substantial
completion.
If a contracting entity, contractor, or subcontractor fails to pay retainage, if any,
pursuant to the terms of a contract or as required in this section, the
contracting entity, contractor, or subcontractor shall pay interest to the
contractor or subcontractor to whom payment was due, beginning on the first
business day after the payment was due, at the rate of twelve percent (12%)
per annum.
Effective:June 26, 2007
History: Created 2007 Ky. Acts ch. 136, sec. 3, effective June 26, 2007.
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