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Senate committee raises retained-escrow threshold from $500,000 to $2 million
Summary
The Senate standing committee on Economic Development, Tourism & Labor advanced legislation to increase the contract price threshold that triggers retained-escrow protections for property-improvement contracts and to bar contract provisions that waive those escrow requirements.
Senator Greg Elkins, District 28, told the Senate standing committee on Economic Development, Tourism & Labor that he was presenting a bill to amend state law so higher-value construction contracts trigger retained-escrow protections. "We're here to ask, or to present bill that would amend KRS 371.160," Elkins said, explaining the proposal raises the minimum contract price that requires escrowed retainage from $500,000 to $2,000,000.
The measure also would amend KRS 371.405 to make contract provisions that attempt to waive or extinguish the escrow requirement void and unenforceable, Elkins said. "This section will ensure that the monies withheld from and rightfully owed to the contractor exist in a secure escrow account," he said. Richard Vincent, executive vice president of the Associated General Contractors (AGC) of Kentucky, and Kevin Doyle, a chief financial officer who accompanied Elkins, were introduced as guests who could answer committee questions.
Supporters framed the change as an inflation adjustment to a statute enacted in 1990. Elkins said the amendment responds to "construction cost inflation that we've seen over the past 35 years," and noted the current statute does not apply to contracts with cities, counties, school boards or other government entities.
Committee members moved and seconded the measure and voted to report it favorably to the full Senate. The clerk recorded the motion passing by voice and roll call; the chair announced the vote as "9 to 0." The bill will proceed to the floor for further consideration.
No amendments or substantive conditions were recorded in committee testimony. The bill’s text and any floor amendments will determine the final scope of changes to KRS 371.160 and KRS 371.405.
