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Connecticut Construction Contracts Guide & FAQs

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Connecticut Construction Contracts Overview

Connecticut Payment Terms Overview


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PayIfPaidEnforceable
Pay-If-Paid Enforceable

Yes, pay-if-paid clauses have been enforced in Connecticut, although the courts are hesitant to do so, as long as the language is clear and unambiguously sets a condition precedent to payment.


PayWhenPaidisValid
Pay-When-Paid Enforceable

Pay-when-paid clauses are enforceable in Connecticut as establishing a reasonable time for payment.


PromptPaymentMostlyUnregulated
Prompt Payment Timing To Primes May Be Modified

Prompt payment timing from the public entity to the owner of 45 days acts as the default if the contract is silent. All other payments must be made within 30 days of receipt of payment.


Retainage May Cannot Be Modified by Contract
Retainage Limits May Not Be Exceeded

The limits on retainage for public works projects cannot be exceeded by contract.

A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, construction is a highly regulated industry in the United States, and that doesn’t stop with respect to the payment aspect. Legislation related to payment timing, retainage, lien rights or other security instruments, how to treat funds prior to payment, and more all must be balanced with construction participants’ freedom of contract.

In Connecticut there are strict rules and regulations that limit freedom of contract, as public policy has generally come down on the side of protecting payments to construction participants, and regulatory control toward that end. This is true with respect to both private and public projects in Connecticut.

On this page, you’ll find resources, legal information, and answers to frequently asked questions about Colorado’s construction contract and payment terms requirements.

Connecticut construction contract provisions

While Connecticut generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.

“No lien” clauses

Any purported clause in a construction contract in Connecticut waiving the right to file a mechanics lien or a claim against a payment bond in Connecticut, also referred to as “no-lien clauses,” have been declared void and will have no effect under CT law, However, subordination of a lien claim is allowed, which can essentially operate in the same manner as a no-lien clause, so contractors should be wary of such provisions before entering into any new construction contract or subcontract.

Contingent payment clauses

There are two types of “contingent payment” clauses: pay-if-paid and pay-when-paid.

Pay-if-paid clauses shift the burden of nonpayment to the subcontractor. In other words, these clauses create a condition precedent (payment from the owner) before the obligation to pay a subcontractor arises. Connecticut, although hesitant to enforce such clauses, have upheld them in court. However, the degree of specificity and intent is quite high. Further, even if upheld as an enforceable pay-if-paid clause, it “does not waive the Plaintiffs’ rights to look directly to the owner for payment either through the use of a mechanic’s lien or the remedies set forth in the construction contract statutes, or to make a claim on the payment bond.” –See: Lindale Constr. v. Cont’l Cas. Co.

On the other hand, pay-when-paid clauses only operate as a timing mechanism. These clauses merely set a reasonable time for payment, it does not fully shift the risk of owner nonpayment; the underlying obligation to pay still exists. Such clauses are enforceable in Connecticut, but only to the extent that they are not in conflict with the timing for payment set forth by Connecticut’s prompt payment statutes.. Particularly, if a purported pay-if-paid clause is deemed to be insufficiently clear or unambiguous, the CT Superior Court mentions that when the “language in the article is somewhat ambiguous… it is concluded that the language in the article should be characterized as a “pay when paid” type of provision.”

While Connecticut is clearly reluctant to enforce pay when paid clauses, the Connecticut Supreme Court passed on the opportunity to rule on the enforceability of pay when paid clauses in Blakeslee Arpaia Chapman, Inc. v. EI Constructors, Inc., despite outlining 8 distinct reasons why pay when paid clauses should not be enforceable.

Prompt payment timing clauses

Connecticut has a set of prompt payment laws governing payment timing on both private and public construction projects. On private projects, the payment deadlines apply to all projects valued at over $25K. On such projects, payments from the owner to the general contractor must be made within 30 days of a request for payment. All other payments down the contracting chain must be made within 25 days of the paying party’s receipt of payment. These deadlines cannot be altered or modified by the terms of the contract between the parties.

As for public projects, the prompt payment rules regarding payments to the prime contractor act as the default. In other words, the terms of the contract will govern when payments must be made, but if the contract is silent, then the 45 days from receipt of a pay app or receipt of goods/services (whichever is later) applies. All other payments must be made to subs and suppliers within 30 days of receipt of payment.

Retainage limits

The amount of retainage that can be withheld on both private and public projects in Connecticut is strictly regulated. On private projects valued at over $25K, no more than 5% of the estimated amount of each progress payment.

On public projects, the amount of retainage that can be withheld varies depending on the public entity who commissioned the work. On State government projects, the no more than 7.5% of each payment may be withheld until the midway point on the project. Once the project reaches 50% completion, retainage must be reduced to no more than 5% of the remaining payments. For county, local, and municipal projects, retainage is capped at no more than 5% for the lifespan of the project.

Connecticut construction contract requirements

Generally, Connecticut doesn’t have any specific requirements for construction contracts, although there are a few things that should always be included in your contracts. For private construction projects that are covered under the CT prompt payment laws ($25K+) the contract must include the prompt payment timing as the payment schedule.

Additionally, there are very specific requirements for contracts involving the construction of new homes and the repair of existing residential properties valued at $200 or more. Such contracts must be in writing and require some specific information to be included; which includes the contractor’s name, address, and registration number, a start and completion date, the date of the transaction, and more. For a full breakdown see: What Residential Contractors Need to Know About The CT Home Improvement Act.

Construction Contracts FAQs in Connecticut

Construction contracts and payment terms are highly regulated in Connecticut. It can be confusing to figure out when payments must be made, how to make them, and how to best protect your company from expensive problems. Here are some frequently asked questions that come up with construction contracts and payment terms on Connecticut jobs

Connecticut Construction Contracts FAQs

Can you waive lien rights by contract in Connecticut?

No. In Connecticut, “no-lien clauses,” or the ability to waive lien rights or bond claim rights by contract has been declared void and unenforceable by statute under Conn. Gen. Stat. §42-158l:

(a) Any provision in a construction contract… that purports to waive or release the right… to (1) claim a mechanic’s lien, or (2) make a claim against a payment bond, for services, labor, or materials which have not yet been performed and paid shall be void and have no effect.

• See the answer to this CT sub’s question: Is it unreasonable for me to refuse to sign a waiver of right to file a mechanics lien before starting a job?

However, subsection (b) of that same statute should give pause:

(b) Notwithstanding any provision of subsection (a) of this section, this section shall not be construed to prohibit (1) the subordination of a mechanic’s lien to the lien of a mortgage or security interest, or (2) the enforcement of an agreement to subordinate a mechanic’s lien to the lien of a mortgage or security interest.

Subordination of a mechanics lien, can essentially have the same effect as a no-lien clause; so CT contractors should keep an eye out for such language in their contracts.

Do I need a written contract to be able to file a Connecticut mechanics lien?

Under Connecticut’s mechanics lien laws, there is no specific requirement for the contract to be in writing in order to file a mechanics lien. However, it’s always recommended that contractors get their construction agreements in writing.

• Dive deeper: Can A Contract File A Lien Without A Written Contract?

Projects involving the new home construction or repairs to existing residential property over $200 do require that the agreement be in writing, if not, the agreement is voidable which could potentially jeopardize lien rights in Connecticut. Bottom line, always try to get your contracts in writing.

How does Connecticut treat pay-if-paid and pay-when-paid clauses?

Pay-if-paid clauses

Despite Connecticut’s general reluctance to enforce pay if paid clauses, they will be enforced when a clause is detailed, specific, and contains exact wording that the parties intend to shift the risk of non-payment. This is a very exacting requirement in Connecticut.

Merely using words that work as “magic words” to shift the risk in other states (like “condition precedent”) is insufficient by itself in Connecticut. The courts require a high degree of specificity to establish a condition precedent to payment. Take for example, these two clauses:

The subcontractor agrees that the contractor shall be under no obligation to pay the subcontractor for any work until the contractor has been paid by the owner. The payment provisions of this agreement are subject to the condition that the contractor receive, in good funds from the owner, progress payments in at least the amounts payable to the subcontractor on this project … The subcontractor expressly accepts the risk that it will not be paid for work performed by it if the contractor, for whatever reason, is not paid by the owner for such work

• Determined to be sufficient to enforce a pay-if-paid clause in Lindade Construction, Inc. v. Continental Casualty Company 

Subcontractor expressly agrees that payment by the owner to the subcontractor for any work performed by the subcontractor is a condition precedent to any payment by the contractor to the subcontractor

• Determined to be sufficient to enforce a pay-if-paid clause in Sil/Carr Corp. v. Bartlett Brainard Eacott, Inc.

Pay-when-paid clauses

Connecticut also has enforced pay-when paid clauses as well, and if a pay-if-paid clause is found to lack the requisite clarity and unambiguity, then it will be treated as a pay-when-paid clause, which only requires payment within a reasonable time. Take, for example, this Court of Appeals opinion:

“… the clause ‘subject to payment with all outstanding payments to be paid in full at time of financing’ was not a condition on which payment was contingent. This clause set forth the time, which was in the sole control of the defendant, when payment was to be made by the defendant.”

Are no-damages-for-delays clauses enforceable in Connecticut?

Connecticut courts have routinely enforced “no damages for delay clauses” in construction contracts. However, the CT Supreme Court has recognized four exceptions to the enforceability of such clauses:

(1) delays caused by the owner’s bad faith or it’s willful, malicious, or grossly negligent conduct,
(2) uncontemplated delays;
(3) delays so unreasonable that they constitute an intentional abandonment of the contract by the owner; &
(4) delays resulting from the owner’s breach of a fundamental obligation of the contract.

Can you contract around Connecticut's prompt payment terms?

Connecticut’s prompt payment laws regulate the timing of payments on both private and public construction projects.

Private projects

The private prompt payment requirements are strict in Connecticut. They apply to all private projects of $25K or more (excluding 1-4 unit residential projects). The owner must pay direct contractors no later than 30 days after receipt of a payment application. All other payments to subs and suppliers must be made within 25 days of receipt of payment from the higher-tiered party. The timing of these payments may not be modified by the terms of the agreement between the parties.

Public projects

As far as the public prompt payment laws in Connecticut, they apply to all projects valued at $100K+. The payment timing from the public entity to the general contractor act as the default, rather than the rule. The terms of the contract between the parties will regulate the timing of payments. However, if the contract is silent, then payments must be made within 45 days of either receipt of a pay app, or completion of that portion of goods or services; whichever is later.

All other payments are strictly governed by the public prompt pay laws. Payments to subs and suppliers must be made no later than 30 days of the paying party’s receipt of payment. This timing may not be modified by contract.

Can you contract around Connecticut's retainage requirements?

Private projects

The statutes governing retainage practices on private construction projects strictly limits the amount of retainage that may be withheld at no more than 5% of the estimated payment amount. However, Connecticut does allow contractors to deposit securities in lieu of retainage.

Public projects

The amount of retainage that may be withheld on Connecticut public works projects can vary depending on the entity commissioning the work. For projects under a state government agency, no more than 7.5% may be withheld as retainage. However, upon reaching 50% completion of the project, retainage must be reduced to no more than 5% of the remaining payments. As for county, municipal, or local government projects, no more than 5% may be withheld as retainage.

• Dive deeper: Connecticut Retainage Guide & FAQs

Does Connecticut have any specific requirements for construction contracts?

Although there are no specific requirements for construction contracts in general in Connecticut, there are some some requirements involving contracts for new home construction and home improvement contracts. Failure to include this information can render the contract void and unenforceable.

New Home Construction Contracts

These requirements apply to any new construction of 2-family unit or fewer dwellings. Under Conn. Gen. Stat. §20-417k, the contract must be in writing and include:

• Signatures by both the contractor and the consumer;
• Date of transaction;
• Contractor’s name, address, and registration number;
• Start and completion dates;
• State that the contract is entered into by a registered new home construction contractor; &
• Disclosure of each corporation, LLC, partnership, sole proprietorship, or other legal entity, which is or has been a new home construction contractor, in which the owner(s) are or have been a shareholder, member, partner, or owner during the previous five years.

Home Improvement Contracts

The home improvement contract requirements must be met for any contract for the repair, alteration, improvement, addition, etc. of a private residential property of 6 or fewer units or residential rental property where the total contract price exceeds $200. Under Conn. Gen. Stat. §20-429, the contract must be in writing and include:

• Signatures by both the contractor and the owner;
• Contains the entire agreement between the parties;
• Date of transaction;
• Contractor’s name, address, and registration number;
• Notice of cancellation rights under Chapter 740 (right to cancel until midnight on the 3rd business day after execution of the agreement);
• Start and completion dates;
• State that the contract is entered into by a registered salesman or registered home improvement contractor; &
• Disclosure of each corporation, LLC, partnership, sole proprietorship, or other legal entity, which is or has been a home improvement contractor or new home construction contractor, in which the owner(s) are or have been a shareholder, member, partner, or owner during the previous five years.

→ Learn more: What Residential Contractors Need to Know About the Connecticut Home Improvement Act

How long do I have to bring a breach of contract claim for nonpayment in Connecticut?

The statute of limitations for a breach of contract claim in Connecticut varies, depending on whether the contract is oral or written:

• Oral contracts: 3 years from the alleged breach of contract (§52-581)

• Written contracts: 6 years from the alleged breach of the contract (§52-576)

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