That's a common question, for good reason. First, a contractor is required to release payments in accordance with the contract and within 30 days after applications for payment is timely submitted by the unpaid party. If payment is not made timely, the rate of interest provided for in the contract will apply - and if no interest was accounted for in the contract, then interest will be determined by § 47-14-121 of the Tennessee Code. Further, if the amounts being retained by a contractor exceed what's allowed by law, a contractor's violation is a Class A misdemeanor and they may be subject to a fine of $3,000. It's also worth noting that each day the contractor fails to comply with Tennessee law is a separate violation - so the penalties can add up quickly Finally, if suit is filed against a Tennessee contractor, or if a mechanics lien is filed on a given project, a Tennessee contractor could face other potential damages.
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