                                 CODE OF VIRGINIA

DEPOSIT OF CERTAIN RETAINED FUNDS ON CERTAIN CONTRACTS WITH LOCAL GOVERNMENTS;
PENALTY FOR FAILURE TO TIMELY COMPLETE (§ 2.2-4334)

A. Any county, city, town or agency thereof or other political subdivision of
the Commonwealth when contracting directly with contractors for public contracts
of $200,000 or more for construction of highways, roads, streets, bridges,
parking lots, demolition, clearing, grading, excavating, paving, pile driving,
miscellaneous drainage structures, and the installation of water, gas, sewer
lines and pumping stations where portions of the contract price are to be
retained, shall include in the Bid Proposal an option for the contractor to use
an escrow account procedure for utilization of the political subdivision&#8217;s
retainage funds by so indicating in the space provided in the proposal
documents. In the event the contractor elects to use the escrow account
procedure, the escrow agreement form included in the Bid Proposal and Contract
shall be executed and submitted to the political subdivision within fifteen
calendar days after notification. If the escrow agreement form is not submitted
within the fifteen-day period, the contractor shall forfeit his rights to the
use of the escrow account procedure.

B. In order to have retained funds paid to an escrow agent, the contractor, the
escrow agent, and the surety shall execute an escrow agreement form. The
contractor&#8217;s escrow agent shall be a trust company, bank or savings
institution with its principal office located in the Commonwealth. The escrow
agreement and all regulations adopted by the political subdivision entering into
the contract shall be substantially the same as that used by the Virginia
Department of Transportation.

C. This section shall not apply to public contracts for construction for
railroads, public transit systems, runways, dams, foundations, installation or
maintenance of power systems for the generation and primary and secondary
distribution of electric current ahead of the customer&#8217;s meter, the
installation or maintenance of telephone, telegraph or signal systems for public
utilities and the construction or maintenance of solid waste or recycling
facilities and treatment plants.

D. Any such public contract for construction with a county, city, town or agency
thereof or other political subdivision of the Commonwealth, which includes
payment of interest on retained funds, may require a provision whereby the
contractor, exclusive of reasonable circumstances beyond the control of the
contractor stated in the contract, shall pay a specified penalty for each day
exceeding the completion date stated in the contract.

E. Any subcontract for such public project that provides for similar progress
payments shall be subject to the provisions of this section.

HISTORY: 1989, c. 1, § 11-56.1; 2001, c. 844.