CHAPTER 5. WITHHOLDING AND BOND TO SECURE PAYMENT OF SUBCONTRACTORS, LABOR, AND MATERIALMEN
IC 5-16-5
Chapter 5. Withholding and Bond to Secure Payment of
Subcontractors, Labor, and Materialmen
IC 5-16-5-1
Withholding final payments; filing claims for payment; release of
surety; definitions
Sec. 1. Except as hereinafter otherwise provided, when any public
building or other public work or public improvement of any character
whatsoever is being constructed, erected, altered or repaired under
contract at the expense of the state or a commission created by law,
it shall be the duty of any such board, commission, trustee, officer or
agent acting on behalf of the state or commission created by law, to
withhold final payment to the contractor until such contractor has
paid to the subcontractor or subcontractors, materialmen for material
furnished, labor employed in such construction or those furnishing
any service in relation to or in connection with such construction,
erection, alteration or repair, all bills due and owing the same;
Provided, That there is a sufficient sum owing to the contractor to
pay all such bills, and if there is not a sufficient sum owing to such
contractor on such contract to pay all such bills, then the sum owing
on such contract shall be prorated in payment of all such bills among
the parties entitled thereto; Provided, That such subcontractor or
subcontractors, materialmen, laborers or those furnishing service as
herein provided shall file with any such board, commission, trustee,
officer, or agent acting on behalf of such state or commission created
by law, their claim within sixty (60) days from the last labor
performed, last material furnished, or last service rendered by them,
as provided in section 2 of this chapter. Where no dispute shall arise
between any parties interested in such funds so withheld, the board,
commission, trustee, officer or agent acting on behalf of said state or
commission created by law, shall pay said claim or claims out of the
funds due such contractor and take receipt therefor, which sum or
sums shall be deducted from the contract price. Where there is a
dispute between any of the parties claiming to be entitled to such
funds so withheld, or any part thereof, sufficient funds shall be
retained by such board, commission, trustee, officer or agent acting
on behalf of said state or commission created by law until such
dispute is settled and the correct amount is determined, when
payment shall be made as aforesaid; Provided, however, That
nothing in this chapter contained shall prevent or preclude a full,
final, and complete settlement upon a contract with the contractor or
contractors after thirty (30) days from the date of the completion and
acceptance of the work as completed upon the furnishing of
satisfactory evidence showing the payment in full of all
subcontractors, materialmen, laborers or those furnishing services in
the performance of said contract; Provided, further, That the surety
of said contractor or contractors shall not be released until the
expiration of one (1) year after the final settlement with said
contractor or contractors. The terms "public building," "public work"
and "public improvement," or combinations thereof, as used in this
chapter, shall be construed to include all buildings, work or
improvements the cost of which is paid for by funds derived from
taxation.
(Formerly: Acts 1911, c.173, s.1; Acts 1925, c.44, s.1; Acts 1931,
c.168, s.1; Acts 1933, c.258, s.1.) As amended by Acts 1981, P.L.57,
SEC.10.
IC 5-16-5-2
Contract provisions for payments; deposit of bonds; filing verified
statements of amount due; suit against sureties
Sec. 2. (a) In all contracts awarded contractors for the
construction, erection, alteration, or repair of a public building or
other public work or improvement as provided in section 1 of this
chapter, the contract must provide for the payment of subcontractors,
labor, materialmen, and those performing service in connection with
the construction, erection, alteration, or repair. The contract must
provide for the payment of subcontractors by withholding by the
board, commission, trustee, officer, or agent acting on behalf of the
state or commission, funds sufficient from the contract price to pay
the subcontractor, labor, materialmen, and those furnishing service
in relation to or in connection with construction, erection, alteration,
or repair. A bond shall be executed by the contractor to the state,
approved by the board, commission, trustee, officer, or agent acting
on behalf of the state or commission, in an amount equal to the total
contract price. The bond shall be conditioned for payment by the
contractor, the contractor's successors and assigns, and by the
subcontractors, their successors and assigns, of all indebtedness,
which may accrue to any person, firm, limited liability company, or
corporation on account of any labor or service performed, materials
furnished, or service rendered in the construction, erection,
alteration, or repair of a building, work, or improvement, including
all road, highway, street, alley, bridge, sewer, drain, or other public
improvement. The bond by its terms shall be conditioned to directly
inure to the benefit of subcontractors, laborers, materialmen, and
those performing service who have furnished or supplied labor,
material, or service for the construction of any public work or
improvement.
(b) The bond required under subsection (a) shall be deposited with
the board, commission, trustee, officer, or agent acting on behalf of
the state or commission for the benefit of a person, firm, limited
liability company, or corporation interested in and entitled to the
bond. The bond shall be conditioned that:
(1) a change, modification, omission, or addition in and to the
terms or conditions of the contract, plans, specifications,
drawings, or profile; or
(2) any irregularity or defect in the contract or in the
proceedings preliminary to the letting and awarding of the
contract;
shall not affect or operate to release or discharge the surety.
(c) The provisions of this chapter shall become a part of the terms
of a contract awarded under this chapter. A bond for a public work
or improvement is subject to the provisions of this chapter.
(d) A person, firm, limited liability company, or corporation to
whom money is due on account of having performed labor or having
furnished material or service in the construction, erection, alteration,
or repair of a building, work, or improvement under this chapter
shall, within sixty (60) days after the completion of the labor or
service or within sixty (60) days after the last item of material has
been furnished, file with the board, commission, trustee, officer,
clerk, or agent of the state or commission that entered into contract
with the principal contractor for the public work or improvement
duplicate verified statements of the amount due to the subcontractor.
The board, commission, trustee, officer, authorized clerk, or agent of
the state shall deliver to the surety or sureties on the bond one (1) of
the duplicate statements. The failure to deliver a duplicate statement
by a board, commission, trustee, officer, authorized clerk, or agent
of the state does not affect or invalidate the rights of the person, firm,
limited liability company, or corporation to whom money is due on
account of having performed labor or service or having furnished
material, nor does the failure to deliver a duplicate statement operate
as a defense for the surety.
(e) No suit shall be brought against a surety or sureties on a bond
under this section until the expiration of thirty (30) days after the
filing of the verified duplicate statement. If the indebtedness is not
paid in full at the expiration of thirty (30) days, the person, firm,
limited liability company, or corporation may bring an action in a
court of competent jurisdiction upon the bond. The action must be
commenced within sixty (60) days from the date of the final
completion and acceptance of the public building or public work, and
unless commenced within sixty (60) days, action on the bond against
the surety or sureties is barred.
(f) On state highway road and bridge contracts the provisions of
the Indiana department of transportation law (IC 8-23-9) with respect
to the bond shall govern.
(Formerly: Acts 1911, c.173, s.2; Acts 1925, c.44, s.2; Acts 1931,
c.168, s.2; Acts 1933, c.258, s.2.) As amended by Acts 1980, P.L.74,
SEC.11; Acts 1981, P.L.57, SEC.11; P.L.18-1990, SEC.13;
P.L.8-1993, SEC.63.
IC 5-16-5-3
Conflicting laws
Sec. 3. This chapter shall not be construed as conflicting with any
other laws for the protection of labor, subcontractors, or
materialmen, but is supplemental to those laws.
(Formerly: Acts 1911, c.173, s.3.) As amended by P.L.25-1986,
SEC.90.