Ind. Code § 5-16-5-1 – Withholding final payments; filing claims for payment; release of surety

(a) Except as otherwise provided in this chapter, when a public work is performed under contract at the expense of the state or a commission created by law, the public body shall withhold final payment to the contractor until the contractor has paid to:
1. (1) all subcontractors;
2. (2) all suppliers of materials for material furnished;
3. (3) all labor employed in the public work; and
4. (4) all those furnishing any service in relation to or in connection with the public work;
  all bills due and owing to the persons described in subdivisions (1) through (4) who have filed a claim under subsection (c).
(b) If there is not a sufficient sum owing to the contractor on the contract to pay all the bills, then the sum owing on the contract shall be prorated in payment of all the bills among the persons entitled to payment.
(c) A person claiming payment under this section must file with the public body a claim not later than sixty (60) days after the last labor is performed, the last material is furnished, or the last service is rendered by that person, as provided in section 2 of this chapter.
(d) If there is no dispute among the claimants, the public body shall pay all claims out of the funds due the contractor and take a receipt for each payment. The total of amounts paid under this subsection shall be deducted from the contract price.
(e) If there is a dispute among the claimants, the public body shall retain sufficient funds until the dispute is settled, the correct amounts are determined, and payment of those amounts shall be made as provided in subsection (d).
(f) Except for amounts required to be withheld under subsection (e) or as otherwise provided in this chapter, this chapter does not preclude a full, final, and complete settlement upon a contract with a contractor after thirty (30) days from the date of the completion and acceptance of the work as completed.
(g) The surety of a contractor may not be released until the expiration of one (1) year after the final settlement with the contractor.
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; P.L.75-2012, SEC.7.