New Kentucky Law Safeguards Rights of Construction Contractors to Sue
- posted: Oct. 15, 2025
- Contracts
Disagreements over the nonpayment of construction contracts occur frequently. Contractors who have finished a job based on the expectation that they will receive full payment on completion often find themselves forced to chase property owners for the designated funds. In some cases, the hiring individual or entity will formulate some excuse as to why the agreed-upon amount is not being provided. Other times, no explanation is given for the nonpayment.
Though some legal protections were in place for construction contractors, a new Kentucky law bolsters their ability to secure the compensation they’ve earned. Under Senate Bill 76, when a contract with a private party is valued at $2 million or more, any portion of the payment that the owner retains subject to project completion must be held in an escrow account. Once the job is done in a satisfactory manner, the owner must provide a release that triggers transfer of the escrow funds to the contractor. Parties to construction contracts are no longer permitted to negotiate away this escrow requirement.
Likewise, the law bars contract provisions that purport to eliminate or undermine a contractor’s right to seek relief in court or waive other essential rights conferred under Kentucky law. By barring enforcement of these terms, the bill safeguards contractors from being coerced into unfavorable language that could put them at an unfair legal disadvantage. However, the bill does note that binding arbitration can be utilized as alternative dispute resolution method.
Among the law’s most important elements is its protection against clauses that unjustly prevent contractors from recovering costs or damages due to delays—especially when such delays stem from factors within the control of the contracting entity. Many construction law conflicts stem from situations where a project cannot be completed on time. There are numerous reasons why an unforeseen delay could occur, such as weather, regulatory hurdles or bureaucratic inefficiencies. By prohibiting clauses that put the entire economic burden of any delay on the contractor, this provision fosters a more equitable distribution of risk and responsibility.
The firm of Hemmer Wessels McMurtry PLLC in Fort Mitchell handles a wide range of construction law matters for clients throughout the Commonwealth. Call us at 859-344-1188 or contact us online to discuss this change to the law or any other legal concern.
New Kentucky Law Safeguards Rights of Construction Contractors to Sue
- posted: Oct. 15, 2025
- Contracts
Disagreements over the nonpayment of construction contracts occur frequently. Contractors who have finished a job based on the expectation that they will receive full payment on completion often find themselves forced to chase property owners for the designated funds. In some cases, the hiring individual or entity will formulate some excuse as to why the agreed-upon amount is not being provided. Other times, no explanation is given for the nonpayment.
Though some legal protections were in place for construction contractors, a new Kentucky law bolsters their ability to secure the compensation they’ve earned. Under Senate Bill 76, when a contract with a private party is valued at $2 million or more, any portion of the payment that the owner retains subject to project completion must be held in an escrow account. Once the job is done in a satisfactory manner, the owner must provide a release that triggers transfer of the escrow funds to the contractor. Parties to construction contracts are no longer permitted to negotiate away this escrow requirement.
Likewise, the law bars contract provisions that purport to eliminate or undermine a contractor’s right to seek relief in court or waive other essential rights conferred under Kentucky law. By barring enforcement of these terms, the bill safeguards contractors from being coerced into unfavorable language that could put them at an unfair legal disadvantage. However, the bill does note that binding arbitration can be utilized as alternative dispute resolution method.
Among the law’s most important elements is its protection against clauses that unjustly prevent contractors from recovering costs or damages due to delays—especially when such delays stem from factors within the control of the contracting entity. Many construction law conflicts stem from situations where a project cannot be completed on time. There are numerous reasons why an unforeseen delay could occur, such as weather, regulatory hurdles or bureaucratic inefficiencies. By prohibiting clauses that put the entire economic burden of any delay on the contractor, this provision fosters a more equitable distribution of risk and responsibility.
The firm of Hemmer Wessels McMurtry PLLC in Fort Mitchell handles a wide range of construction law matters for clients throughout the Commonwealth. Call us at 859-344-1188 or contact us online to discuss this change to the law or any other legal concern.
