§ 34-27.1-1. Payment of mortgage proceeds to subcontractors and materialmen. (a) In any construction mortgage loan, where the original face amount of the loan is under five hundred thousand dollars ($500,000), the mortgagee may pay all or any portion of the mortgage loan to the owner, or lessee, as the case may be, at any time, except to the extent that a lien or notice thereof has been duly recorded and the mortgagee has received, by registered mail, a written statement from the owner, lessee, contractor, subcontractor or materialman, sworn to be true, setting forth the name and address and the amount of the claim of any subcontractor or materialman who has not been paid and specifying the amount of the unpaid balance of his claim. To the extent that any claims of subcontractors or materialmen are shown on the statement to be unpaid, the mortgagee shall, from any funds remaining in its hands, either:

(1) Make checks payable to the owner or lessee, as the case may be, jointly with the subcontractors or materialmen for the amount of the unpaid claim, and a check for any balance may be issued to the owner or lessee, or

(2) Withhold an amount equal to the total of the amounts shown by the statement to be unpaid.

(b) In the event that the mortgagee is notified in writing by registered mail by the owner, lessee, or contractor that there is a dispute as to the satisfactory performance of any subcontractor or materialman, then the amount due the subcontractor or materialman shall not be paid by the mortgagee until the question is resolved.

History of Section. (P.L. 1973, ch. 136, § 1; P.L. 1979, ch. 375, § 1; P.L. 1984, ch. 101, § 2.)