§ 4-13.6-7-2 — Contract provisions for retainage of payments; escrow accounts and agreements

Indiana § 4-13.6-7-2

• Jurisdiction: Indiana
• Art. 13.6: STATE PUBLIC WORKS
• Ch. 7: Bonding, Escrow, and Retainages

Text

(a) If the estimated cost of a public works
project is one million dollars ($1,000,000) or more, the division shall
include as part of the public works contract provisions for the retainage
of portions of payments by the division to the contractor, by the
contractor to subcontractors, and for the payment of subcontractors and
suppliers by the contractor. The contract must provide that the division
may withhold from the contractor sufficient funds from the contract
price to pay subcontractors and suppliers as provided in section 4 of
this chapter.
(b) A public works contract and contracts between contractors and
subcontractors, if portions of the public works contract are
subcontracted, may include a provision that at the time any retainage
is withheld, the division or the contractor, as the case may be, may
place the retainage in an escrow account, as mutually agreed, with:
(1) a bank;
(2) a savings and loan institution;
(3) the state of Indiana; or
(4) an instrumentality of the state of Indiana;
as escrow agent. The parties to the contract shall select the escrow
agent by mutual agreement. The parties to the agreement shall enter
into a written agreement with the escrow agent.
(c) The escrow agreement must provide the following:
(1) The escrow agent shall promptly invest all escrowed principal
in the obligations that the escrow agent selects, in its discretion.
(2) The escrow agent shall hold the escrowed principal and
income until it receives notice from both of the other parties to the
escrow agreement specifying the percentage of the escrowed
principal to be released from the escrow and the persons to whom
this percentage is to be released. When it receives this notice, the
escrow agent shall promptly pay the designated percentage of
escrowed principal and the same percentage of the accumulated
escrowed income to the persons designated in the notice.
(3) The escrow agent shall be compensated for its services as the
parties may agree. The compensation shall be a commercially
reasonable fee commensurate with fees being charged at the time
the escrow fund is established for the handling of escrow accounts
of like size and duration. The fee must be paid from the escrowed
income of the escrow account.
(d) The escrow agreement may include other terms and conditions
that are not inconsistent with subsection (c). Additional provisions may
include provisions authorizing the escrow agent to commingle the
escrowed funds held under other escrow agreements and provisions
limiting the liability of the escrow agent.

Legislative History

As added by P.L.24-1985, SEC.7. Amended by P.L.22-1997, SEC.3; P.L.160-2006, SEC.4; P.L.172-2011, SEC.7.