This Section applies to subcontractors' retainage amounts expected to be equal to or greater than $20,000. Upon the contractor's receipt of the first partial or progress payment from the Department, at the request of the subcontractor and with the approval of the contractor, the retainage of the subcontract shall be deposited under a trust agreement with an Illinois financial institution, whose deposits are insured by an agency or instrumentality of the federal government, of the subcontractor's choice and subject to the approval of the contractor. The subcontractor shall receive any interest on the amount deposited. Upon application by the subcontractor, a trust agreement by the financial institution and the contractor must contain, at a minimum, the following provisions:
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This Section applies to subcontractors' retainage amounts expected to be equal to or greater than $20,000. Upon the contractor's receipt of the first partial or progress payment from the Department, at the request of the subcontractor and with the approval of the contractor, the retainage of the subcontract shall be deposited under a trust agreement with an Illinois financial institution, whose deposits are insured by an agency or instrumentality of the federal government, of the subcontractor's choice and subject to the approval of the contractor. The subcontractor shall receive any interest on the amount deposited. Upon application by the subcontractor, a trust agreement by the financial institution and the contractor must contain, at a minimum, the following provisions: (1) The amount to be deposited subject to the trust. (2) The terms and conditions of payment in case of default of the subcontractor. (3) The termination of the trust agreement upon completion of the subcontract. The subcontractor is responsible for obtaining the written consent of the financial institution trustee. Any costs or service fees must be borne by the subcontractor. The trust agreement may, at the discretion of the contractor and upon request of the subcontractor, become operative at the time of the first partial payment in accordance with existing statutes and Department procedures. Subcontractors' trust agreements are voluntary and supersede any prohibition regarding retainage that may be adopted by any transportation agency. This Section applies to all subcontracts in effect on and after the effective date of this amendatory Act of the 92nd General Assembly.