HOUSE BILL NO. 514

INTRODUCED BY R. SOMERVILLE

A BILL FOR AN ACT ENTITLED: "AN ACT PROHIBITING A CONSTRUCTION CONTRACT FROM INCLUDING PROVISIONS MAKING PAYMENT FROM A GENERAL CONTRACTOR TO A SUBCONTRACTOR CONTINGENT UPON PAYMENT FROM THE OWNER TO THE GENERAL CONTRACTOR OR REQUIRING A SUBCONTRACTOR TO WAIVE RIGHTS TO A LIEN OR PAYMENT BOND BEFORE PAYMENT FOR LABOR OR MATERIALS; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE."

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

NEW SECTION. Section 1. Construction contracts requiring contingent payment or lien or bond waiver void. A construction contract may not contain provisions:

(1) requiring a contractor, subcontractor, or material supplier to waive the right to a construction lien or a right to a claim against a payment bond before the contractor, subcontractor, or material supplier has been paid for the labor, materials, or both labor and materials, furnished by the contractor, subcontractor, or material supplier; or

(2) making a payment to a general contractor from a person who does not have a contractual agreement with the subcontractor or supplier a condition precedent to a general contractor's payment to a subcontractor or supplier.

NEW SECTION. Section 2. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 28, chapter 2, part 7, and the provisions of Title 28, chapter 2, part 7, apply to [section 1].

NEW SECTION. Section 3. Effective date -- applicability. [This act] is effective on passage and approval and applies to construction contracts entered into on or after [the effective date of this act].

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