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Unannotated Code of Maryland (Last Updated: May 16, 2014) |
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STATE FINANCE AND PROCUREMENT |
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DIVISION II. GENERAL PROCUREMENT LAW |
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TITLE 13. SOURCE SELECTION -- STATE PROCUREMENT CONTRACTS |
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SUBTITLE 2. PROCEDURAL REQUIREMENTS |
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PART III. CONTRACT FORMATION |
§ 13-225. Retainage
Latest version.
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(a) Definitions. --
(1) In this section the following words have the meanings indicated.
(2) "Payment security" has the meaning stated in § 17-101 of this article.
(3) "Performance security" has the meaning stated in § 17-101 of this article.
(b) Contract percentage; protection of State interests. --
(1) If a contractor has furnished 100% payment security and 100% performance security in accordance with Title 17, Subtitle 1 of this article under a State procurement contract for construction, the percentage specified in the contract for retainage may not exceed 5% of the total amount.
(2) In addition to retainage, a primary procurement unit and the Maryland Transportation Authority may withhold from payments otherwise due a contractor any amount that the unit reasonably believes necessary to protect the State's interest.
(3) Retainage withheld by a primary procurement unit and the Maryland Transportation Authority may be deposited in an interest-bearing escrow account in accordance with § 15-108 of this article.
(c) Contractor percentage vis-a-vis primary procurement unit. --
(1) A contractor may not retain a percentage of payments due a subcontractor that exceeds the percentage of payments retained by the primary procurement unit or the Maryland Transportation Authority.
(2) 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.
(d) Lower tier subcontractor. --
(1) A subcontractor may not retain a percentage of payments due a lower tier subcontractor that exceeds the percentage of payments retained from the subcontractor.
(2) 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.
(e) Escrow. -- If retainage has been placed in escrow under § 15-108 of this article, each payment of retainage shall include a pro rata portion of interest earned.
(f) Payment or performance security. -- This section may not be construed to limit the application of the provisions of Title 17, Subtitle 1 of this article.