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’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.

Terms Used In Virginia Code 2.2-4334

  • City: means an independent incorporated community which became a city as provided by law before noon on July 1, 1971, or which has within defined boundaries a population of 5,000 or more and which has become a city as provided by law. See Virginia Code 1-208
  • Construction: means building, altering, repairing, improving or demolishing any structure, building or highway, and any draining, dredging, excavation, grading or similar work upon real property. See Virginia Code 2.2-4301
  • Contract: A legal written agreement that becomes binding when signed.
  • Escrow: Money given to a third party to be held for payment until certain conditions are met.
  • Includes: means includes, but not limited to. See Virginia Code 1-218
  • Public contract: means an agreement between a public body and a nongovernmental source that is enforceable in a court of law. See Virginia Code 2.2-4301
  • Town: means any existing town or an incorporated community within one or more counties which became a town before noon, July 1, 1971, as provided by law or which has within defined boundaries a population of 1,000 or more and which has become a town as provided by law. See Virginia Code 1-254

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’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’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.

1989, c. 1, § 11-56.1; 2001, c. 844.

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