Colorado Prompt Payment Guide & FAQs

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Colorado Prompt Payment Overview

Colorado Prompt Payment Requirements


  • Private Jobs
  • Public Jobs
  • Top Links
NO
DAYS
Prime Contractors

Not specified in state statutes


NO
DAYS
Subcontractors

Not specified in state statutes


NO
DAYS
Suppliers

Not specified in state statutes


NO
FEES
Interest & Fees

Not specified in state statutes

END OF A MONTH/60
Prime Contractors

For Prime (General) Contractors, progress payments due by "the end of each calendar month or as soon thereafter as practicable." Final payment due within 60 days of completion and acceptance of the project.


7
DAYS
Subcontractors

For Subcontractors, payment due within 7 days after payment is received above.


7
DAYS
Suppliers

For Suppliers, payment due within 7 days after payment is received above.


15%
/ YEAR
Interest & Fees

Interest awarded at the higher of 15% year or contractual amount for payments to sub-tiers.

Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.

Projects Covered by Prompt Payment in Colorado

In Colorado, prompt payment deadlines and penalties only apply to public works projects with a total contract price of at least $150,000. The laws don’t apply to private projects. The statutes can be found in Colo. Rev. Stat. §§24-91-101 – 24.91.103.

Payment Deadlines

Once the prime contractor has performed according to the contract terms, they will be entitled to submit a payment request to the contracting public entity. Progress payments are to be made at the end of each month, or as soon thereafter as practicable. As for final payments, these are due within 60 days after completion and acceptance of the project as a whole.

Upon receipt or progress or final payments from the public entity, the prime is obligated to pay their subs and suppliers within 7 days of payment. The same 7-day turnaround period applies to all other payments down the chain.

Penalties For Late Payment

If any of these payments are late or wrongfully withheld, interest will begin to accrue on the 8th day at a rate of 15% per year (1.25%.month), or the interest rate stated in the contract; whichever is higher. This interest will accrue once the payment becomes overdue, and runs until payment is made. For payments from the public entity to the prime contractor, there is nothing in the statute that states the amount of interest that will accrue.

Colorado Prompt Payment Frequently Asked Questions

Colorado’s prompt payment statutes set forth specific timeframes for when general contractors, subcontractors, suppliers, and others involved with a public construction project must be paid. This page provides an overview of these regulations and addresses frequently asked questions related to the Colorado prompt payment laws.

Colorado Prompt Payment Private Projects FAQs

Does Colorado have statute that addresses prompt payment for private projects?

In Colorado, Prompt Payment requirements only apply to public works projects with a total contract price of at least $150,000. Prompt Payment laws do not apply to private projects in the state.

This doesn’t mean that owners on private projects in Colorado can delay payment indefinitely. Project payments should still follow the requirements of the original construction contract.

To learn more about contractor rights and remedies for non-payment, visit Colorado Payment Resources.

What options do I have if the owner or GC is delaying payment on a private project?

The contract should spell out the application and payment requirements. If the GC fails to meet the terms of the contract, contractors still have remedies to get paid.

  1. Send invoice reminders.
  2. Send a payment demand letter.
  3. Send a Notice of Intent to Lien.
  4. As long as they have protected their lien rights, unpaid contractors can file a mechanics lien to recover payment.

Learn more: How to file a mechanics lien in Colorado.

Colorado Prompt Payment Public Projects FAQs

Do I have to send a letter or file anything to qualify for Prompt Payment Penalties or Remedies in Colorado?

The Colorado statute automatically gives a contractor the right to prompt payment protection “if the contractor is satisfactorily performing the contract.”

How does Colorado's Prompt Payment law affect retainage?

Colorado prompt payment requirements don’t affect the ability of a party to withhold retainage as part of the contract.

According to the statute, “Nothing in this subsection (2) shall be construed to affect the retention provisions of any contract.”

Can I include Prompt Payment interest fees in a bond claim?

No. Colorado law does not allow for the recovery of miscellaneous amounts in a bond claim. In order to recover interest penalties due under the act, contractors must file a prompt payment claim in civil court.

If I am paid late according to Prompt Payment Statutes, can I obtain interest or other Penalty Payments?

If payment is received late, and none of the valid reasons for late or extended payment apply, the party to be paid is entitled to recover the interest allowed by law. As a practical matter, it may be difficult to recover amounts in excess of the contractually due amount without filing suit.

Are there reasons for which payment may be withheld past the general deadline?

Colorado does not specifically delineate reasons for which payment may be withheld, other than the fact that payments may be conditioned upon satisfactory performance of the contract.

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Colorado Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Colorado’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. Colorado’s specific laws can be found in: Colo. Rev. Stat. §§ 24-91-101 – 24-91.103 and are reproduced below

Prompt Payment Statute on Private Projects

Does Colorado have prompt payment statute on private projects?

Colorado does not address prompt payment for private projects in it’s statutes.

Prompt Payment Statute on Public Projects

24-91-101: Legislative Declaration

(1) The general assembly hereby declares that retentions in and delays in the completion of construction contracts with public entities are a matter of statewide concern and are affected with the public interest and that the provisions of this article are enacted in the exercise of the police power of this state for the purpose of protecting the health, peace, safety, and welfare of the people of this state.

(2) The general assembly hereby further finds and declares that the construction industry is a significant component of the state’s economy; that there is a substantial statewide interest in fostering the growth and stability of the construction industry and ensuring that it remains economically viable; that the ability of construction and design enterprises to obtain and satisfactorily perform projects at all levels of government affects the construction industry as a whole; that clauses in public construction contracts which provide that public entities shall not be required to compensate contractors for delays in the completion of the work caused by the public entity are adhesive in nature and, if enforced, can have ruinous financial consequences on affected contractors due to risks over which the contractor may have no control; that public construction projects are subject to public appropriation laws which may be in direct conflict with commonly used construction contract clauses such as clauses which authorize additional payment to the contractor based on changed conditions; and that there is a substantial statewide interest in ensuring that the policy underlying the efficient expenditure of public moneys is balanced with the policy of fostering a healthy and viable construction industry.

24-91-102: Definitions

As used in this article, unless the context otherwise requires:

(1) “Acceptable securities” means:

(a) United States bonds, United States treasury notes, or United States treasury bills;

(b) General obligation or revenue bonds of this state;

(c) General obligation or revenue bonds of any political subdivision of this state;

(d) Certificates of deposit from a state or national bank or a savings and loan association insured by the federal deposit insurance corporation or its successor and having its principal office in this state.

(1.5) “Construction” includes the terms capital construction, capital renewal, and controlled maintenance as defined in section 24-30-1301.

(2) “Contractor” means any person, company, firm, or corporation which is a party to a contract with a public entity to construct, erect, alter, install, or repair any highway, public building, public work, or public improvement, structure, or system.

(3) “Public entity” means this state or a county, city, city and county, town, or district, including any political subdivision thereof.

(4) “Subcontractor” means and includes any person, company, firm, or corporation which is a party to a contract with a contractor to construct, erect, alter, install, or repair any highway, public building, public work, or public improvement, structure, or system and which, in connection therewith, furnishes and performs on-site labor with or without furnishing materials.

(5) “Substantial completion” means the date when the construction is sufficiently complete, in accordance with the contract documents, as modified by any change orders agreed to by the parties, so that the work or designated portion thereof is available for use by the owner.

24-91-103: Public entity--contracts--partial payments

(1) (a) A public entity awarding a contract exceeding one hundred fifty thousand dollars for the construction, alteration, or repair of any highway, public building, public work, or public improvement, structure, or system, including real property as defined in section 24-30-1301 (15), shall authorize partial payments of the amount due under such contract at the end of each calendar month, or as soon thereafter as practicable, to the contractor, if the contractor is satisfactorily performing the contract. The public entity shall pay at least ninety-five percent of the calculated value of completed work. The withheld percentage of the contract price of any contracted work, improvement, or construction may be retained until the contract is completed satisfactorily and finally accepted by the public entity.

(b) The public entity shall make a final settlement in accordance with section 38-26-107, C.R.S., within sixty days after the contract is completed satisfactorily and finally accepted by the public entity.

(c) If the public entity finds that satisfactory progress is being made in any phase of the contract, it may, upon written request by the contractor, authorize final payment from the withheld percentage to the contractor or subcontractors who have completed their work in a manner finally acceptable to the public entity. Before the payment is made, the public entity shall determine that satisfactory and substantial reasons exist for the payment and shall require written approval from any surety furnishing bonds for the contract work.

(2) Whenever a contractor receives payment pursuant to this section, the contractor shall make payments to each of his subcontractors of any amounts actually received which were included in the contractor’s request for payment to the public entity for such subcontracts. The contractor shall make such payments within seven calendar days of receipt of payment from the public entity in the same manner as the public entity is required to pay the contractor under this section if the subcontractor is satisfactorily performing under his contract with the contractor. The subcontractor shall pay all suppliers, sub-subcontractors, laborers, and any other persons who provide goods, materials, labor, or equipment to the subcontractor any amounts actually received which were included in the subcontractor’s request for payment to the contractor for such persons, in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. If the subcontractor fails to make such payments in the required manner, the subcontractor shall pay said suppliers, sub-subcontractors, and laborers interest in the same manner set forth in this subsection (2) regarding payments by the contractor to the subcontractor. At the time the subcontractor submits a request for payment to the contractor, the subcontractor shall also submit to the contractor a list of the subcontractor’s suppliers, sub-subcontractors, and laborers. The contractor shall be relieved of the requirements of this subsection (2) regarding payment in seven days and interest payment until the subcontractor submits such list. If the contractor fails to make timely payments to the subcontractor as required by this section, the contractor shall pay the subcontractor interest as specified by contract or at the rate of fifteen percent per annum whichever is higher, on the amount of the payment which was not made in a timely manner. The interest shall accrue for the period from the required payment date to the date on which payment is made. Nothing in this subsection (2) shall be construed to affect the retention provisions of any contract.

(3) (Deleted by amendment, L. 2011, (HB 11-1115), ch. 211, p. 912, § 2, effective August 10, 2011.)

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