07 LC
36 0423
House
Bill 138
By:
Representatives Coan of the
101st,
Shaw of the
176th,
O`Neal of the
146th,
Rogers of the
26th,
Millar of the
79th,
and others
A
BILL TO BE ENTITLED
AN ACT
AN ACT
To
amend Title 13 of the Official Code of Georgia Annotated, relating to contracts,
so as to provide for the rejection of construction contracts when contractors,
subcontractors, low tier subcontractors, or materialmen do not provide required
insurance coverage; to provide for the definitions of certain terms; to prohibit
an owner, contractor, or subcontractor from rejecting work completed, rejecting
material supplied, or withholding payment due to lack of conforming insurance
following acceptance of a policy or certificate of insurance; to provide certain
exceptions; to provide for related matters; to provide for an effective date; to
repeal conflicting laws; and for other purposes.
BE
IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:
SECTION
1.
Title
13 of the Official Code of Georgia Annotated, relating to contracts, is amended
by adding a new chapter as follows:
"CHAPTER
12
13-12-1.
(a)
As used in this chapter, the term:
(1)
'Certificate holder' means an owner, contractor, subcontractor, or lower tier
subcontractor who, through a contract to improve real property, to perform
construction services, or to perform construction management services, requires
a contractor, subcontractor, lower tier subcontractor, or materialman to obtain
insurance and show evidence of coverage.
(2)
'Contractor' means a person who contracts with an owner to improve real
property, to perform construction services, or to perform construction
management services for an owner.
(3)
'Lower tier subcontractor' means a person other than a contractor having a
direct contract with a subcontractor.
(4)
'Materialman' means any person furnishing materials.
(5)
'Materials' means those items for which liens are permitted under Chapter 14 of
Title 44 and tools, appliances, machinery, or equipment used in making
improvements to the real estate, to the extent of the reasonable value or the
contracted rental price, whichever is greater, of such tools, appliances,
machinery, or equipment.
(6)
'Owner' means a person who has an interest in the real property improved, for
whom an improvement is made, and who ordered the improvement to be made. An
owner includes private persons and entities and state, local, or municipal
government agencies, instrumentalities, or entities.
(7)
'Subcontractor' means, but is not limited to, subcontractors having privity of
contract with the contractor.
(b)
A certificate holder may accept the policy or certificate or may reject it as
being nonconforming before the date the contractor, subcontractor, or lower tier
subcontractor commences work or the materialman delivers material.
(c)(1)
If a certificate holder does not reject the policy or certificate in writing and
state the specific reason for the rejection before the date the contractor,
subcontractor, or lower tier subcontractor commences work or the materialman
delivers material, the certificate holder shall be deemed to have accepted the
policy or certificate for work performed or materials supplied prior to the time
the policy or certificate is specifically rejected in writing; provided,
however, that the certificate holder shall not be deemed to have accepted a
policy or certificate if:
(A)
The policy or certificate was knowingly and fraudulently altered; or
(B)
The certificate reflects coverages or conditions that are not contained in the
underlying policy.
(2)
A certificate holder shall not be deemed to have accepted a policy or
certificate for work not yet performed or materials not yet supplied on the date
the certificate holder rejects the policy or certificate as being
nonconforming.
(3)
After a policy or certificate is accepted, or deemed to be accepted, a
certificate holder shall not use the lack of conforming insurance as a reason to
reject work previously completed by a contractor, subcontractor, or lower tier
subcontractor, to reject materials previously supplied by a materialman, or to
withhold payment for work previously completed or for material previously
supplied; provided, however, that the certificate holder may reject work
previously completed or material previously supplied or may withhold payment for
such work or materials if:
(A)
The policy or certificate provided by the contractor, subcontractor, lower tier
subcontractor, or materialman was knowingly and fraudulently
altered;
(B)
The certificate reflects coverages or conditions that are not contained in the
underlying policy; or
(C)
The policy is canceled, nonrenewed, or materially and adversely altered during
the term of the construction contract.
(d)
If the owner, contractor, or subcontractor rejects a policy or certificate as
nonconforming in writing and states the specific reasons for rejection, any
provision of the contract requiring such insurance is enforceable, and payment
may be withheld for work performed or materials supplied after the date of the
rejection of the policy or certificate."
SECTION
2.
This
Act shall become effective on July 1, 2007.
SECTION
3.
All
laws and parts of laws in conflict with this Act are repealed.