Amends TCA Title 16, Chapter 15 and Title 66.

JURISDICTION OF COURTS OF GENERAL SESSIONS Present law generally provides that the jurisdiction of courts of general sessions extend to the sum of $25,000 in all civil cases, both law and equity. This bill adds that such limitation does not apply to cases seeking payment of retained funds under the Prompt Pay Act of 1991, in which the court has unlimited original jurisdiction. RETENTION OF PORTION OF CONTRACT PRICE IN ESCROW Under present law, whenever, in any contract for the improvement of real property, a certain amount or percentage of the contract price is retained, that retained amount must be deposited in a separate, interest-bearing, escrow account with a third party which must be established upon the withholding of any retainage. If the party withholding the retained funds fails to deposit the funds into an escrow account as provided in this section, then the party must pay the owner of the retained funds an additional $300 per day as damages, not as a penalty, for each and every day that the retained funds are not deposited into an escrow account. This bill changes the amount a party that retained funds and failed to deposit the funds into an escrow account must pay the owner of the retained funds from $300 to $500. PAYMENT OF RETAINAGE BY OWNER Under present law, when an owner (1) has received a use and/or occupancy permit for an improvement from a governmental agency lawfully issuing such permit; (2) has received a certificate of substantial completion from an architect or engineer charged with supervision of the construction of an improvement; or (3) begins to use or could have begun to use an improvement, then the owner must, after any such event and pursuant to the terms of the written contract, pay to the prime contractor all retainage the owner may have withheld pursuant to the written contract, except any sum which the owner may reasonably withhold in accordance with the written contract between the owner and the prime contractor; the retainage must be paid within 90 days after the date of the occurrence of an event included in (1), (2) or (3). This bill deletes the above provisions and provides, instead, a party must, after an event described by (A), (B), or (C) below and, pursuant to the terms of the written contract, pay to the prime contractor all retained funds the party may have withheld pursuant to the written contract, except any sum that the party may reasonably withhold in accordance with the written contract between the party and the prime contractor; provided, however, the retainage must be paid within 90 days after the date of the occurrence of an event described in (A), (B), or (C) below. The party must pay the prime contractor within the timeframes described when the party: (A) Has received a use or occupancy permit for an improvement from a governmental agency lawfully issuing the permit; (B) Has received a certificate of substantial completion from an architect, engineer, or other party charged with supervision, observation, or management of the construction of an improvement; or (C) Begins to use or could have begun to use the improvement. If the party withholding the retained funds fails to pay or otherwise release the retainage as required, then the party must pay the owner of the retained funds an additional $500 per day as damages, not as a penalty, for each day that the retained funds are not paid or otherwise released. Damages accrue from the first day after the ninetieth day of the first occurrence of an event described in (A), (B), or (C) above. This bill requires that, in addition to the damages set forth above, a prime contractor or remote contractor that fails to pay or otherwise release retained funds as required by law pay the owner of the retained funds an additional $500 per day as damages, not as a penalty, for each day that the retained funds are not paid or otherwise released. Damages accrue from the first day after the tenth day the prime contractor or remote contractor received the retainage from the owner or higher-tier contractor. REMOTE CONTRACTOR This bill provides that a remote contractor is entitled to an early release of the retainage belonging to the remote contractor upon the remote contractor establishing that the improvement or work furnished under the written agreement to which the remote contractor is a party is substantially complete. However, a party withholding retainage is not required to release or pay retainage if it provides a written response setting forth adequate legal reasons for its refusal to release retainage, including, but not limited to, the failure of the remote contractor to substantially complete its work within 10 days of its receipt of the remote contractor certificate of substantial completion. Upon substantial completion of the remote contractor's work, a remote contractor may issue a written request to the party withholding retainage to release the retainage belonging to the remote contractor. A party that receives a request and that is withholding retainage must release the retainage within 10 days of the party's receipt of the request. A remote contractor may certify the substantial completion of the remote contractor's work by sending a certificate of substantial completion to the party withholding retainage. A party that fails to release the retainage for which a remote contractor provides certification is subject to the damages already provided. The party withholding retainage may assert as a defense in an action for payment of retainage or the damages provided by this section that the remote contractor's work was not substantially complete. This bill defines "substantially complete" as the following circumstances: (1) The remote contractor obtained a permit from a building codes department or other authority having jurisdiction over the remote contractor's work and received an approval from the department or authority allowing the use of the remote contractor's work for its intended purpose; (2) The use of, or ability to use, the remote contractor's work; or (3) Ten days after the date the party withholding retainage receives a certificate of substantial completion substantially similar to the required form, signed by the remote contractor certifying that its work is substantially complete and seeking release or payment of the retainage belonging to the remote contractor. APPLICABILITY This bill applies to contracts entered into, amended, or renewed on or after the effective date of this bill.