Retainage Exception for Public Payment Bonds

On a public project with a public payment bond, there is a retainage exception regarding the TIMING of when a subcontractor, sub-subcontractor or supplier can initiate a lawsuit concerning retainage.  This retainage exception is important for claimants initiating a payment bond lawsuit for retainage and for general contractors defending such lawsuit.  This retainage exception is embodied in Florida Statute s. 255.05(10):

(10) An action, except an action for recovery of retainage, must be instituted against the contractor or the surety on the payment bond or the payment provisions of a combined payment and performance bond within 1 year after the performance of the labor or completion of delivery of the materials or supplies. An action for recovery of retainage must be instituted against the contractor or the surety within 1 year after the performance of the labor or completion of delivery of the materials or supplies; however, such an action may not be instituted until one of the following conditions is satisfied:
    (a) The public entity has paid out the claimant’s retainage to the contractor, and the time provided under s. 218.735 or s. 255.073(3) for payment of that retainage to the claimant has expired;
    (b) The claimant has completed all work required under its contract and 70 days have passed since the contractor sent its final payment request to the public entity; or
    (c) At least 160 days have passed since reaching substantial completion of the construction services purchased, as defined in the contract, or if not defined in the contract, since reaching beneficial occupancy or use of the project.
    (d) The claimant has asked the contractor, in writing, for any of the following information and the contractor has failed to respond to the claimant’s request, in writing, within 10 days after receipt of the request:
        1. Whether the project has reached substantial completion, as that term is defined in the contract, or if not defined in the contract, if beneficial occupancy or use of the project has occurred.
        2. Whether the contractor has received payment of the claimant’s retainage, and if so, the date the retainage was received by the contractor.
        3. Whether the contractor has sent its final payment request to the public entity, and if so, the date on which the final payment request was sent.
If none of the conditions described in paragraph (a), paragraph (b), paragraph (c), or paragraph (d) is satisfied and an action for recovery of retainage cannot be instituted within the 1-year limitation period set forth in this subsection, this limitation period shall be extended until 120 days after one of these conditions is satisfied.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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