(1) Performance by an original contractor, subcontractor or material supplier in accordance with the provisions of a construction contract entitles the original contractor, subcontractor or material supplier to payment from the party with whom the original contractor, subcontractor or material supplier contracts.
(2) If a subcontractor or material supplier has performed in accordance with the provisions of a construction contract, the original contractor shall pay to the subcontractor or material supplier, and each subcontractor shall pay to its subcontractors or material suppliers, the full amount received for such subcontractor’s work and for materials and products supplied based on the subcontract or purchase order terms and conditions within seven days of receipt by the original contractor or subcontractor of a progress payment or final payment. Payment is not required under this subsection unless a subcontractor or material supplier provides to the original contractor or subcontractor a billing or invoice for the work performed or materials or products supplied in compliance with the terms of the contract between the parties. Each subcontractor or material supplier must provide an appropriate waiver of any mechanic’s or materialman’s lien in accordance with subcontract or purchase order terms and conditions. The original contractor or subcontractor may require that such waivers of lien be notarized.
(3) Any failure to reasonably account for the application or use of payments, as proven in a legal proceeding authorized under the terms of the construction contract, may constitute grounds for disciplinary action by the Construction Contractors Board under ORS 701.098.
(4) Nothing in this section prevents an original contractor when submitting a bill or estimate to an owner, or a subcontractor when submitting a bill or estimate to the original contractor, from omitting from the bill estimate amounts withheld from payment to a subcontractor or material supplier for:
(a) Unsatisfactory work progress;
(b) Defective construction work, materials or products not remedied;
(c) Disputed work, materials or products, not to exceed 150 percent of the amount in dispute;
(d) Failure to comply with other material provisions of the construction contract;
(e) Third party claims filed or reasonable evidence that such a claim will be filed;
(f) Failure of the subcontractor to make timely payments to subcontractors and material suppliers for labor, equipment, materials and products;
(g) Damage to an original contractor, subcontractor or material supplier;
(h) Reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum;
(i) A reasonable amount for retainage, as defined in ORS 701.410, that does not exceed the actual percentage allowed by the subcontract or purchase order; or
(j) Other items as allowed under the subcontract or purchase order terms and conditions.
(5) If a progress or final payment to a subcontractor or material supplier is delayed by more than seven days after receipt of a progress or final payment by an original contractor or subcontractor, the original contractor or subcontractor shall pay its subcontractor or material supplier interest beginning on the eighth day, except during periods of time during which payment is withheld pursuant to subsection (4) of this section, at the rate of one and one-half percent a month or a fraction of a month on the unpaid balance or at such higher rate as the parties agree.
(6) In any action, claim or arbitration brought to collect payments or interest under this section, the prevailing party shall be awarded reasonable costs and attorney fees. [2003 c.675 §56]
Note: See note under 701.620.
Section: Previous 701.580 701.585 701.590 701.595 701.600 701.605 701.620 701.625 701.630 701.635 701.640 701.645 701.900 701.990 701.992 NextLast modified: August 7, 2008