§ 34-27.1-1 - Payment of mortgage proceeds to subcontractors and materialmen.
SECTION 34-27.1-1
§ 34-27.1-1 Payment of mortgage proceedsto subcontractors and materialmen. – (a) In any construction mortgage loan, where the original face amount of theloan is under five hundred thousand dollars ($500,000), the mortgagee may payall or any portion of the mortgage loan to the owner, or lessee, as the casemay be, at any time, except to the extent that a lien or notice thereof hasbeen duly recorded and the mortgagee has received, by registered mail, awritten statement from the owner, lessee, contractor, subcontractor ormaterialman, sworn to be true, setting forth the name and address and theamount of the claim of any subcontractor or materialman who has not been paidand specifying the amount of the unpaid balance of his claim. To the extentthat any claims of subcontractors or materialmen are shown on the statement tobe unpaid, the mortgagee shall, from any funds remaining in its hands, either:
(1) Make checks payable to the owner or lessee, as the casemay be, jointly with the subcontractors or materialmen for the amount of theunpaid claim, and a check for any balance may be issued to the owner or lessee,or
(2) Withhold an amount equal to the total of the amountsshown by the statement to be unpaid.
(b) In the event that the mortgagee is notified in writing byregistered mail by the owner, lessee, or contractor that there is a dispute asto the satisfactory performance of any subcontractor or materialman, then theamount due the subcontractor or materialman shall not be paid by the mortgageeuntil the question is resolved.