In this subtitle the following words have the meanings indicated. “Contract” means an agreement of any kind or nature, express or implied, for doing work or furnishing materials, or both, for or about a building. “Contract” includes an agreement for: The erection, repair, rebuilding, or improvement of a building; The drilling and installation of wells to supply water; The construction or installation of any swimming pool or fencing; The grading, filling, landscaping, and paving of the premises; The installation of waterlines, sanitary sewers, storm drains, or streets; or The erection, repair, rebuilding, or improvement of a wharf. “Contractor” means a person who has a contract with an owner. “Owner” means: The owner of the land; or An owner’s tenant for life or for years, provided the tenant enters into the contract with the contractor. “Subcontractor” means a person who has a contract with anyone except the owner or the owner’s agent. “Subcontractor” includes a supplier. “Undisputed amount” means an amount owed on a contract for which there is no good faith dispute, including any retainage withheld.

Except for work done or materials furnished under a contract enumerated in § 9–305 of this subtitle, a contractor or subcontractor who does work or furnishes material under a contract shall be entitled to prompt payment under subsection (b) of this section. If the contract is with an owner, the owner shall: If the contract does not provide for specific dates or times of payment, pay to the contractor undisputed amounts owed under the terms of the written contract, within the earlier of: 30 days after the day on which the occupancy permit is granted; or 30 days after the day on which the owner or the owner’s agent takes possession; or If the contract provides for specific dates or times of payment, pay to the contractor undisputed amounts owed within 7 days after the date or time specified in the contract. Paragraph (1) of this subsection does not apply to any contract between the contractor and: The State; A county; A municipal corporation; A board of education; or A public authority or instrumentality. If the contract is not with an owner, the contractor or subcontractor shall pay undisputed amounts owed to its subcontractors within 7 days after receipt by the contractor or subcontractor of each payment received for its subcontractors’ work or materials.

In this section, “undisputed amounts” includes any retention proceeds that exceed the amount authorized to be retained under § 9–304 of this subtitle. In addition to any other remedy provided under any other provision of law, a court of competent jurisdiction, for good cause shown may: Award any equitable relief for prompt payment of undisputed amounts that it considers necessary, including the enjoining of further violations; and In any action, award to the prevailing party: Interest from the date the court determines that the amount owed was due; and Any reasonable costs incurred. If a court determines that an owner, contractor, or subcontractor has acted in bad faith by failing to pay any undisputed amounts owed as required under § 9–302 of this subtitle, the court may award to the prevailing party reasonable attorney’s fees.

In this section, “retention proceeds” means money earned but retained under the terms of a contract or subcontract: By an owner to guarantee performance of the contract by a contractor; By a contractor to guarantee performance of a subcontract by a subcontractor; or By a subcontractor to guarantee performance of a subcontract by another subcontractor. This section does not apply to: A contract in an amount less than $100,000; or A contract or subcontract for a project funded wholly or in part by or through the Department of Housing and Community Development. Except as provided in this section: If a contractor has furnished 100% security to guarantee the performance of a contract and 100% security to guarantee payment for labor and materials, including leased equipment: The retention proceeds under the terms of a contract may not exceed 5% of the contract price; and The retention proceeds of any payment due under the terms of a contract from an owner to a contractor may not exceed 5% of the payment; The retention proceeds of any payment due under the terms of a contract from a contractor to a subcontractor may not exceed the percentage of retention proceeds from the owner to the contractor; and The retention proceeds of any payment due under the terms of a contract from a subcontractor to another subcontractor may not exceed the percentage of retention proceeds from the contractor to the subcontractor. This section may not be construed to prohibit the withholding of any amount due: From the owner to the contractor if the owner reasonably determines that the contractor’s performance under the contract provides reasonable grounds for withholding the additional amount; From the contractor to any subcontractor if the contractor reasonably determines that the subcontractor’s performance under the subcontract provides reasonable grounds for withholding the additional amount; or From a subcontractor to another subcontractor if the subcontractor determines that the other subcontractor’s performance under the subcontract provides reasonable grounds for withholding the additional amount. Undisputed retention proceeds retained by an owner under this section shall be paid within 90 days after the date of substantial completion, as defined by the applicable contract or subcontract.

This subtitle does not: Affect the rights of contracting parties under Subtitle 1 of this title; Apply to a contract for the construction and sale of a single family residential dwelling; Apply to any transaction under the Custom Home Protection Act, Title 10, Subtitle 5 of this article; and Apply to a home improvement contract by a contractor licensed under the Maryland Home Improvement Law.