This inquiry information is being provided by the Michigan Department of Transportation (hereinafter referred to as MDOT) as a courteous service. In preparation of this information, MDOT has endeavored to offer current, correct and clearly expressed information. The information is not part of the contract documents for the project and has no contractual standing. The information will not be accepted as documentation as a basis to file a claim or as evidential use in the claims process
- With agreement of the Lender, Surety and Contractor, can payments be made to a trust or escrow account in lieu of being payable to the DBF Contractor?
- Can payments be made in the name of both the DBF Contractor and the Bank?
- Will MDOT be willing to consent to a Bank taking a security interest in the contract between the DBF Contractor and MDOT? This would be done through an assignment of the DBF Contractor's interest in the contract, and would allow a Bank to have rights/remedies should the DBF Contractor default.
- If the contractor in three years is out of business, will MDOT pay the contractor's lender any payments due the contractor?
- Is there a guarantee of acceptance for lenders? Is there a mechanism in place to make sure payment in 2012? What if contractor is out of business, will the bank get paid?
1. With agreement of the Lender, Surety and Contractor, can payments be made to a trust or escrow account in lieu of being payable to the DBF Contractor?
Answer: Yes, MDOT will consider agreements like this to help facilitate these DBF pilot projects. Proposals like this should be included for consideration in the SOQ.
2. Can payments be made in the name of both the DBF Contractor and the Bank?
Answer: Yes, with agreement of the Lender, Surety and DBF Contractor, payments can be made payable to DBF Contractor and the Bank. It must be proposed by the DBF Contractor and included in the final contract.
3. Will MDOT be willing to consent to a Bank taking a security interest in the contract between the DBF Contractor and MDOT? This would be done through an assignment of the DBF Contractor's interest in the contract, and would allow a Bank to have rights/remedies should the DBF Contractor default.
Answer: MDOT would consider such a security interest assuming it does not result in any additional liability on MDOT's behalf, nor diminish MDOT's rights with the Surety, nor impair any rights MDOT has under the contract.
4. If the contractor in three years is out of business, will MDOT pay the contractor's lender any payments due the contractor?
Answer: MDOT will make payments in accordance with the terms of the contract. See the above questions and answers
5. Is there a guarantee of acceptance for lenders? Is there a mechanism in place to make sure payment in 2012? What if contractor is out of business, will the bank get paid?
Answer: See the above questions and answers.
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