Sec. 3. Any state agency which enters into a contract for any public building, work or improvement, and any contractor subcontracting portions of such contract, which contracts contain provision for retainage shall include in their respective contracts a provision that at the time any retainage is withheld, the state agency and/or contractor shall place such retainage in an escrow account, with a bank, savings and loan institution, or the State of Indiana or an instrumentality thereof, as escrow agent selected by mutual agreement between the affected contract parties, pursuant to a written agreement among the bank or savings and loan institution, the state agency, and the contractor as appropriate. The escrow agreement shall provide as follows:

     (a) The escrow agent shall promptly invest all escrowed principal in such obligations as shall be selected by the escrow agent in its discretion.

Terms Used In Indiana Code 5-16-5.5-3

  • Agent: shall include any board, commission, trustee, officer or agent which acts on behalf of a state agency. See Indiana Code 5-16-5.5-1
  • Contract: A legal written agreement that becomes binding when signed.
  • Contractor: shall mean any person, firm, limited liability company, or corporation who is party to a contract with a state agency to construct, erect, alter or repair any public building or is any way involved in public work or public improvement. See Indiana Code 5-16-5.5-1
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Escrowed income: shall mean the value of all property held in an escrow account over the escrowed principal in such account. See Indiana Code 5-16-5.5-1
  • Escrowed principal: shall mean the value of all cash and securities or other property at the time placed in an escrow account. See Indiana Code 5-16-5.5-1
  • Retainage: means any amount to be withheld from any payment to a contractor or subcontractor pursuant to the terms of a contract until the occurrence of a specified event. See Indiana Code 5-16-5.5-1
  • State agency: means the state of Indiana or any commission or agency created by law. See Indiana Code 5-16-5.5-1
  • Subcontractor: shall mean and include any person, firm, limited liability company, or corporation who is a party to a contract with the contractor and who furnishes and performs on-site labor on any public building, work or improvement. See Indiana Code 5-16-5.5-1
     (b) The escrow agent shall hold the escrowed principal and income until receipt of notice from the state agency and the contractor, or the contractor and the subcontractor, specifying the portion or portions of the escrowed principal to be released from the escrow and the person or persons to whom such portion or portions are to be released. Upon receipt of such notice the escrow agent shall promptly remit the designated portion of escrowed principal and the same proportion of then escrowed income to such person or persons.

     (c) The escrow agent shall be compensated for its services as the parties may agree on a commercially reasonable fee commensurate with fees then being charged 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 agreement may include such other terms and conditions not inconsistent with the foregoing paragraphs (a), (b) and (c) including but not limited to provisions authorizing the escrow agent to commingle the escrowed funds with funds held pursuant to other escrow agreements and limiting the liability of the escrow agent.

Formerly: Acts 1972, P.L.44, SEC.1. As amended by Acts 1977, P.L.60, SEC.2.

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