IC 5-16-5
    Chapter 5. Withholding and Bond to Secure Payment ofSubcontractors, Labor, and Materialmen

IC 5-16-5-1
Withholding final payments; filing claims for payment; release ofsurety; definitions
    Sec. 1. Except as hereinafter otherwise provided, when any publicbuilding or other public work or public improvement of any characterwhatsoever is being constructed, erected, altered or repaired undercontract at the expense of the state or a commission created by law,it shall be the duty of any such board, commission, trustee, officer oragent acting on behalf of the state or commission created by law, towithhold final payment to the contractor until such contractor haspaid to the subcontractor or subcontractors, materialmen for materialfurnished, labor employed in such construction or those furnishingany service in relation to or in connection with such construction,erection, alteration or repair, all bills due and owing the same;Provided, That there is a sufficient sum owing to the contractor topay all such bills, and if there is not a sufficient sum owing to suchcontractor on such contract to pay all such bills, then the sum owingon such contract shall be prorated in payment of all such bills amongthe parties entitled thereto; Provided, That such subcontractor orsubcontractors, materialmen, laborers or those furnishing service asherein provided shall file with any such board, commission, trustee,officer, or agent acting on behalf of such state or commission createdby law, their claim within sixty (60) days from the last laborperformed, last material furnished, or last service rendered by them,as provided in section 2 of this chapter. Where no dispute shall arisebetween any parties interested in such funds so withheld, the board,commission, trustee, officer or agent acting on behalf of said state orcommission created by law, shall pay said claim or claims out of thefunds due such contractor and take receipt therefor, which sum orsums shall be deducted from the contract price. Where there is adispute between any of the parties claiming to be entitled to suchfunds so withheld, or any part thereof, sufficient funds shall beretained by such board, commission, trustee, officer or agent actingon behalf of said state or commission created by law until suchdispute is settled and the correct amount is determined, whenpayment shall be made as aforesaid; Provided, however, Thatnothing in this chapter contained shall prevent or preclude a full,final, and complete settlement upon a contract with the contractor orcontractors after thirty (30) days from the date of the completion andacceptance of the work as completed upon the furnishing ofsatisfactory evidence showing the payment in full of allsubcontractors, materialmen, laborers or those furnishing services inthe performance of said contract; Provided, further, That the suretyof said contractor or contractors shall not be released until theexpiration of one (1) year after the final settlement with saidcontractor or contractors. The terms "public building," "public work"

and "public improvement," or combinations thereof, as used in thischapter, shall be construed to include all buildings, work orimprovements the cost of which is paid for by funds derived fromtaxation.
(Formerly: Acts 1911, c.173, s.1; Acts 1925, c.44, s.1; Acts 1931,c.168, s.1; Acts 1933, c.258, s.1.) As amended by Acts 1981, P.L.57,SEC.10.

IC 5-16-5-2
Contract provisions for payments; deposit of bonds; filing verifiedstatements of amount due; suit against sureties
    Sec. 2. (a) In all contracts awarded contractors for theconstruction, erection, alteration, or repair of a public building orother public work or improvement as provided in section 1 of thischapter, the contract must provide for the payment of subcontractors,labor, materialmen, and those performing service in connection withthe construction, erection, alteration, or repair. The contract mustprovide for the payment of subcontractors by withholding by theboard, commission, trustee, officer, or agent acting on behalf of thestate or commission, funds sufficient from the contract price to paythe subcontractor, labor, materialmen, and those furnishing servicein relation to or in connection with construction, erection, alteration,or repair. A bond shall be executed by the contractor to the state,approved by the board, commission, trustee, officer, or agent actingon behalf of the state or commission, in an amount equal to the totalcontract price. The bond shall be conditioned for payment by thecontractor, the contractor's successors and assigns, and by thesubcontractors, their successors and assigns, of all indebtedness,which may accrue to any person, firm, limited liability company, orcorporation on account of any labor or service performed, materialsfurnished, or service rendered in the construction, erection,alteration, or repair of a building, work, or improvement, includingall road, highway, street, alley, bridge, sewer, drain, or other publicimprovement. The bond by its terms shall be conditioned to directlyinure to the benefit of subcontractors, laborers, materialmen, andthose performing service who have furnished or supplied labor,material, or service for the construction of any public work orimprovement.
    (b) The bond required under subsection (a) shall be deposited withthe board, commission, trustee, officer, or agent acting on behalf ofthe state or commission for the benefit of a person, firm, limitedliability company, or corporation interested in and entitled to thebond. The bond shall be conditioned that:
        (1) a change, modification, omission, or addition in and to theterms or conditions of the contract, plans, specifications,drawings, or profile; or
        (2) any irregularity or defect in the contract or in theproceedings preliminary to the letting and awarding of thecontract;
shall not affect or operate to release or discharge the surety.    (c) The provisions of this chapter shall become a part of the termsof a contract awarded under this chapter. A bond for a public workor improvement is subject to the provisions of this chapter.
    (d) A person, firm, limited liability company, or corporation towhom money is due on account of having performed labor or havingfurnished material or service in the construction, erection, alteration,or repair of a building, work, or improvement under this chaptershall, within sixty (60) days after the completion of the labor orservice or within sixty (60) days after the last item of material hasbeen furnished, file with the board, commission, trustee, officer,clerk, or agent of the state or commission that entered into contractwith the principal contractor for the public work or improvementduplicate verified statements of the amount due to the subcontractor.The board, commission, trustee, officer, authorized clerk, or agent ofthe state shall deliver to the surety or sureties on the bond one (1) ofthe duplicate statements. The failure to deliver a duplicate statementby a board, commission, trustee, officer, authorized clerk, or agentof the state does not affect or invalidate the rights of the person, firm,limited liability company, or corporation to whom money is due onaccount of having performed labor or service or having furnishedmaterial, nor does the failure to deliver a duplicate statement operateas a defense for the surety.
    (e) No suit shall be brought against a surety or sureties on a bondunder this section until the expiration of thirty (30) days after thefiling of the verified duplicate statement. If the indebtedness is notpaid in full at the expiration of thirty (30) days, the person, firm,limited liability company, or corporation may bring an action in acourt of competent jurisdiction upon the bond. The action must becommenced within sixty (60) days from the date of the finalcompletion and acceptance of the public building or public work, andunless commenced within sixty (60) days, action on the bond againstthe surety or sureties is barred.
    (f) On state highway road and bridge contracts the provisions ofthe Indiana department of transportation law (IC 8-23-9) with respectto the bond shall govern.
(Formerly: Acts 1911, c.173, s.2; Acts 1925, c.44, s.2; Acts 1931,c.168, s.2; Acts 1933, c.258, s.2.) As amended by Acts 1980, P.L.74,SEC.11; Acts 1981, P.L.57, SEC.11; P.L.18-1990, SEC.13;P.L.8-1993, SEC.63.

IC 5-16-5-3
Conflicting laws
    Sec. 3. This chapter shall not be construed as conflicting with anyother laws for the protection of labor, subcontractors, ormaterialmen, but is supplemental to those laws.
(Formerly: Acts 1911, c.173, s.3.) As amended by P.L.25-1986,SEC.90.