Massachusetts Prompt Pay Act

[quote style=”boxed” float=”left”]The Prompt Pay Act is set forth in the Massachusetts General Laws, Chapt. 149, Sec. 29E, and provides strict timelines by which the different parties to the contract must make and respond to payment requests and/or change orders, and provide payment.[/quote] The Massachusetts Prompt Payment Act sets forth some fairly strict requirements for substantial construction contracts, and provides additional ammunition with which parties to the contract can encourage payment. The Prompt Pay Act is set forth in the Massachusetts General Laws, Chapt. 149, Sec. 29E, and provides strict timelines by which the different parties to the contract must make and respond to payment requests and/or change orders, and provide payment.

Contracts to Which the Massachusetts Prompt Payment Act Applies

The Prompt Pay Act applies to substantial private construction contracts, with few exceptions. In order for the act to apply, the original contract must be $3 million or more, and may not be for projects “containing or designed to contain at least 1 but not more than 4 dwelling units”. Further, the act specifies that the contract must be “a contract for which a lien may be established under sections 2 or 4 of chapter 254″. In other words, the Prompt Pay Act only applies to contracts for which a valid mechanics lien may be filed against the real estate and improvements.[quote style=”boxed” float=”right”]In other words, the Prompt Pay Act only applies to contracts for which a valid mechanics lien may be filed against the real estate and improvements.[/quote]

This was recently made clear by the United States District Court for the District of Massachusetts in United States v. Constr. & Telcom. Servs., 2013 U.S. Dist. LEXIS 108829 (D. Mass. Aug. 2, 2013). In that case, a subcontractor attempted to make a claim under the Prompt Pay Act (as well as under the Miler Act, and for breach of contract and quantum meruit) for services provided on a federal project. The court noted specifically that “the Prompt Pay Act covers private construction projects, not public projects occurring on public property, such as the federal construction project at issue here.” Since a mechanics lien cannot attach to publicly owned land, public construction contracts are not subject to the requirements of the Prompt Pay Act. Indeed, the court points out that the formal name of the Prompt Pay Act is “An Act Promoting Fairness In Private Construction Contracts.”

So for substantial private construction projects in Massachusetts, the Prompt Pay Act provides some additional leverage and protection. For public projects – the act does not apply.