Title 17. Special Provisions -- State and Local Subdivisions — Subtitle 1. Security for Construction Contracts

the State;

a county, municipal corporation, or other political subdivision;

a public instrumentality; or

any governmental unit authorized to award a contract.

“Supplier” means a person who supplies labor or materials.

“Supplier” includes a lessor of equipment to the extent of the fair rental value of the equipment.

By ordinance, Baltimore City may provide for a program to satisfy the bonding requirements under §§ 17-103, 17-104, 17-106, and 17-107 of this subtitle with respect to any construction contract:

The program shall provide for payment security of at least 50% of the total amount payable under the contract.

Before a public body awards a construction contract exceeding the small procurement amount specified in § 13–109 of this article for construction, the contractor shall provide payment security and performance security that meet the requirements of § 17–104 of this subtitle.

The security shall be:

the contract exceeds $100,000 but does not exceed the small procurement amount specified in § 13–109 of this article; and

the amount of the security does not exceed 50% of the contract amount.

a bond executed by a surety company authorized to do business in the State;

cash in an amount equivalent to a bond; or

other security that is satisfactory to the public body awarding the contract.

Subject to paragraphs (2) and (3) of this subsection, performance security may include the granting of a mortgage or deed of trust on real property located within the State if such security is satisfactory to the public body awarding the contract.

The face amount of a mortgage or deed of trust on real property granted as security under this subsection may not exceed 75% of the contractor’s equity interest in the property.

A mortgage or deed of trust accepted under this subsection shall be recorded by an official designated by the public body accepting the mortgage or deed of trust in the land records of the county where the real property is situated in accordance with § 3–103 of the Real Property Article.

if required by the State or a unit of the State government, shall be payable to “the State of Maryland”; or

if required by any other public body, shall be payable to that public body.

for the State or a unit of the State government, by the Attorney General; and

for any other public body, by its attorney.

if payable to the State under this section, in the Office of the Comptroller; or

if payable to any other public body, in the appropriate office of that public body.

supplied labor or materials in the prosecution of work provided for in a contract subject to this subtitle; and

has not been paid in full for the labor or materials within 90 days after the day that the person last supplied labor or materials for which the claim is made.

A supplier who has a direct contractual relationship with a subcontractor or sub-subcontractor of a contractor who has provided payment security but no contractual relationship with the contractor may sue on the security if the supplier gives written notice to the contractor within 90 days after the labor or materials for which the claim is made were last supplied in prosecution of work covered by the security.

A notice under this subsection:

On request by a person who submits an affidavit verifying that the person has supplied labor or materials but has not been paid or is being sued under this section, the Comptroller or the officer in charge of the office where the payment security or evidence of security is required to be filed shall issue:

The person requesting certification shall pay a reasonable fee, set by the Comptroller or other officer required to issue the certification, to cover the costs of preparation.

A certification under this section is prima facie evidence of the contents, execution, and delivery of payment security.

An executory contract between a supplier and a contractor or subcontractor that is related to a construction contract may not waive or require the supplier to waive the right to sue on payment security under this section.

A provision in an executory contract between a supplier and a contractor or subcontractor that is related to a construction contract and that conditions payment to the supplier on receipt of payment by the person from a public body or other third party, may not abrogate or waive the right of the supplier to sue on payment security under this subtitle.

A provision of a contract made in violation of this subsection is void as against the public policy of the State.

the contract was executed and performed; or

the contractor has its principal place of business.

If a contractor has furnished 100% payment security and 100% performance security in accordance with this subtitle under a contract for construction awarded by a public body, the percentage specified in the contract for retainage may not exceed 5% of the total amount of the contract.

In addition to retainage, a public body may withhold from payments otherwise due a contractor any amount that the public body reasonably believes necessary to protect the public body’s interest.

Except as provided in paragraph (4) of this subsection, within 120 days after satisfactory completion of a contract for construction, a public body shall release any retainage due to the contractor.

If there is a dispute or contract claim between the contractor and the public body concerning the satisfactory completion of a contract for construction, the public body shall release the retainage to the contractor within 120 days after the resolution of the dispute or contract claim.

A contractor may not retain a percentage of payments due a subcontractor that exceeds the percentage of payments retained by the public body.

Paragraph (1) of this subsection may not be construed to prohibit a contractor from withholding any amount in addition to retainage if the contractor determines that a subcontractor’s performance under the subcontract provides reasonable grounds for withholding the additional amount.

A subcontractor may not retain a percentage of payments due a lower tier subcontractor that exceeds the percentage of payments retained from the subcontractor.

Paragraph (1) of this subsection may not be construed to prohibit a subcontractor from withholding any amount in addition to retainage if the subcontractor determines that a lower tier subcontractor’s performance under the subcontract provides reasonable grounds for withholding the additional amount.