Georgia Prompt Payment Guide and FAQs

This chapter shall be known and may be cited as the ‘Georgia Prompt Pay Act.’

As used in this chapter, the term:

(1) “Contractor” means a person who contracts with an owner to improve real property, to perform construction services, or to perform construction management services for an owner.

(2) “Improve” means to build, effect, alter, repair, or demolish any improvement upon, connected with, or on or beneath the surface of any real property or to excavate, clear, grade, fill, or landscape any real property or to construct driveways and private roadways or to furnish materials, including trees and shrubbery, for any of such purposes or to perform any labor upon such improvements.

(3) “Improvement” means all or any part of any building, structure, erection, alteration, demolition, excavation, clearing, grading, filling, or landscaping, including trees and shrubbery, driveways, and roadways, on real property.

(4) “Owner” means a person who has an interest in the real property improved and for whom an improvement is made and who ordered the improvement to be made. “Owner” includes private persons and entities and state, local, or municipal government agencies, instrumentalities, or entities; provided, however, that the provisions of this chapter shall not apply when the owner is a county having a population of less than 10,000 according to the United States decennial census of 1990 or any such future census or when the owner is a municipality having a population of less than 2,500 according to the United States decennial census of 1990 or any such future census.

(5) “Owner’s representative” means the architect or engineer in charge of the project for the owner or such other contract representative or officer as designated in the contract documents as the party representing the owner’s interest regarding administration and oversight of the project.

(6) “Real property” means the real estate that is improved, including lands, leaseholds, tenements, and improvements placed on the real property.

(7) “Receipt” means actual receipt of cash or funds in the contractor’s or subcontractor’s bank account.

(8) “Subcontractor” means any person who has contracted to furnish labor or materials to, or has performed labor or supplied materials for, a contractor or another subcontractor in connection with a contract to improve real property. For purposes of this chapter, the term “subcontractor” shall also include materialmen as defined in Code Section 44-14-360.

Performance by a contractor or subcontractor in accordance with the provisions of his or her contract and the satisfaction of the conditions of his or her contract precedent to payment entitles such person to payment from the party with whom he or she contracts.

(a) When a contractor has performed in accordance with the provisions of a contract, the owner shall pay the contractor within 15 days of receipt by the owner or the owner’s representative of any payment request based upon work completed or service provided under the contract.

(b) When a subcontractor has performed in accordance with the provisions of its subcontract and the subcontract conditions precedent to payment have been satisfied, the contractor shall pay to that subcontractor and each subcontractor shall pay to its subcontractor, within ten days of receipt by the contractor or subcontractor of each periodic or final payment, the full amount received for such subcontractor’s work and materials based on work completed or service provided under the subcontract, provided that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.

(a) Nothing in this chapter shall prevent the owner from withholding payment to its contractor because of the following: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the contractor or its subcontractor to make timely payments for labor, equipment, and materials; damage caused by the contractor to the owner, other contractors, or subcontractors; or reasonable evidence that the contract cannot be completed for the unpaid balance of the contract sum. In addition to the other bases for withholding set forth in this subsection, the owner may withhold a reasonable amount for retainage, provided that the retainage withheld by the owner shall not exceed the retainage percentage set forth in the contract between the contractor and the owner.

(b) Nothing in this chapter shall prevent the contractor or a subcontractor from withholding payment to a subcontractor for: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the subcontractor to make timely payments for labor, equipment, and materials; damage caused by the subcontractor to the owner, the contractor, or contractors or subcontractors; or reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum. In addition to the other bases for withholding set forth in this subsection, the contractor or the subcontractor, as the case may be, may withhold a reasonable amount for retainage, provided that the retainage withheld shall not exceed the percentage retained from the contractor by the owner on account of the subcontractor’s work.

The contractor shall, within ten days from the contractor’s receipt of retainage from the owner, pass through payments to subcontractors and shall reduce each subcontractor’s retainage in the same manner as the contractor’s retainage is reduced by the owner, provided that the value of the subcontractor’s work complete and in place equals 50 percent of his or her subcontract value, including approved change orders and other additions to the subcontract value and, provided, further, that the work of the subcontractor is proceeding satisfactorily and, provided, further, that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.

(a) Except as provided in Code Section 13-11-5, if a periodic or final payment to a contractor is delayed by more than 15 days or if a periodic or final payment to a subcontractor is delayed more than ten days after receipt of periodic or final payment by the contractor or subcontractor, the owner, contractor, or subcontractor, as the case may be, shall pay his or her contractor or subcontractor interest, beginning on the day following the due date, at the rate of 1 percent per month or a pro rata fraction thereof on the unpaid balance as may be due. However, no interest is due unless the person being charged interest has been notified of the provision of this Code section at the time the request for payment is made. Acceptance of progress payments or final payment shall release all claims for interest on said payments.

(b) Nothing in this chapter shall prohibit owners, contractors, and subcontractors from agreeing by contract to rates of interest, payment periods, and contract and subcontract terms different from those stipulated in this Code section, and in this event, these contractual provisions shall control. In case of a willful breach of the contract provisions as to the time of payment, the interest rate specified in this Code section shall apply.

In any action to enforce a claim under this chapter, the prevailing party is entitled to recover a reasonable fee for the services of its attorney including but not limited to trial and appeal and arbitration, in an amount to be determined by the court or the arbitrators, as the case may be.

Neither the right to recover interest on a payment nor the right to recover attorneys’ fees under this chapter are exclusive remedies. This chapter does not modify the remedies available to any person under the terms of a contract or by another statute.

The provisions of this chapter do not apply to improvements to real property intended for residential purposes which consist of 12 or fewer residential units.

The provisions of this chapter do not apply to contracts or subcontracts entered into prior to January 1, 1995.

This chapter shall be known and may be cited as the ‘Georgia Prompt Pay Act.’

 As used in this chapter, the term:

(1) “Contractor” means a person who contracts with an owner to improve real property, to perform construction services, or to perform construction management services for an owner.

(2) “Improve” means to build, effect, alter, repair, or demolish any improvement upon, connected with, or on or beneath the surface of any real property or to excavate, clear, grade, fill, or landscape any real property or to construct driveways and private roadways or to furnish materials, including trees and shrubbery, for any of such purposes or to perform any labor upon such improvements.

(3) “Improvement” means all or any part of any building, structure, erection, alteration, demolition, excavation, clearing, grading, filling, or landscaping, including trees and shrubbery, driveways, and roadways, on real property.

(4) “Owner” means a person who has an interest in the real property improved and for whom an improvement is made and who ordered the improvement to be made. “Owner” includes private persons and entities and state, local, or municipal government agencies, instrumentalities, or entities; provided, however, that the provisions of this chapter shall not apply when the owner is a county having a population of less than 10,000 according to the United States decennial census of 1990 or any such future census or when the owner is a municipality having a population of less than 2,500 according to the United States decennial census of 1990 or any such future census.

(5) “Owner’s representative” means the architect or engineer in charge of the project for the owner or such other contract representative or officer as designated in the contract documents as the party representing the owner’s interest regarding administration and oversight of the project.

(6) “Real property” means the real estate that is improved, including lands, leaseholds, tenements, and improvements placed on the real property.

(7) “Receipt” means actual receipt of cash or funds in the contractor’s or subcontractor’s bank account.

(8) “Subcontractor” means any person who has contracted to furnish labor or materials to, or has performed labor or supplied materials for, a contractor or another subcontractor in connection with a contract to improve real property. For purposes of this chapter, the term “subcontractor” shall also include materialmen as defined in Code Section 44-14-360.

Performance by a contractor or subcontractor in accordance with the provisions of his or her contract and the satisfaction of the conditions of his or her contract precedent to payment entitles such person to payment from the party with whom he or she contracts.

(a) When a contractor has performed in accordance with the provisions of a contract, the owner shall pay the contractor within 15 days of receipt by the owner or the owner’s representative of any payment request based upon work completed or service provided under the contract.

(b) When a subcontractor has performed in accordance with the provisions of its subcontract and the subcontract conditions precedent to payment have been satisfied, the contractor shall pay to that subcontractor and each subcontractor shall pay to its subcontractor, within ten days of receipt by the contractor or subcontractor of each periodic or final payment, the full amount received for such subcontractor’s work and materials based on work completed or service provided under the subcontract, provided that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.

(a) Nothing in this chapter shall prevent the owner from withholding payment to its contractor because of the following: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the contractor or its subcontractor to make timely payments for labor, equipment, and materials; damage caused by the contractor to the owner, other contractors, or subcontractors; or reasonable evidence that the contract cannot be completed for the unpaid balance of the contract sum. In addition to the other bases for withholding set forth in this subsection, the owner may withhold a reasonable amount for retainage, provided that the retainage withheld by the owner shall not exceed the retainage percentage set forth in the contract between the contractor and the owner.

(b) Nothing in this chapter shall prevent the contractor or a subcontractor from withholding payment to a subcontractor for: unsatisfactory job progress; defective construction which has not been remedied; disputed work; third-party claims filed or reasonable evidence that a claim will be filed; failure of the subcontractor to make timely payments for labor, equipment, and materials; damage caused by the subcontractor to the owner, the contractor, or contractors or subcontractors; or reasonable evidence that the subcontract cannot be completed for the unpaid balance of the subcontract sum. In addition to the other bases for withholding set forth in this subsection, the contractor or the subcontractor, as the case may be, may withhold a reasonable amount for retainage, provided that the retainage withheld shall not exceed the percentage retained from the contractor by the owner on account of the subcontractor’s work.

The contractor shall, within ten days from the contractor’s receipt of retainage from the owner, pass through payments to subcontractors and shall reduce each subcontractor’s retainage in the same manner as the contractor’s retainage is reduced by the owner, provided that the value of the subcontractor’s work complete and in place equals 50 percent of his or her subcontract value, including approved change orders and other additions to the subcontract value and, provided, further, that the work of the subcontractor is proceeding satisfactorily and, provided, further, that the subcontractor has provided or provides such satisfactory reasonable assurances of continued performance and financial responsibility to complete his or her work as the contractor in his or her reasonable discretion may require, including but not limited to a payment and performance bond.

(a) Except as provided in Code Section 13-11-5, if a periodic or final payment to a contractor is delayed by more than 15 days or if a periodic or final payment to a subcontractor is delayed more than ten days after receipt of periodic or final payment by the contractor or subcontractor, the owner, contractor, or subcontractor, as the case may be, shall pay his or her contractor or subcontractor interest, beginning on the day following the due date, at the rate of 1 percent per month or a pro rata fraction thereof on the unpaid balance as may be due. However, no interest is due unless the person being charged interest has been notified of the provision of this Code section at the time the request for payment is made. Acceptance of progress payments or final payment shall release all claims for interest on said payments.

(b) Nothing in this chapter shall prohibit owners, contractors, and subcontractors from agreeing by contract to rates of interest, payment periods, and contract and subcontract terms different from those stipulated in this Code section, and in this event, these contractual provisions shall control. In case of a willful breach of the contract provisions as to the time of payment, the interest rate specified in this Code section shall apply.

In any action to enforce a claim under this chapter, the prevailing party is entitled to recover a reasonable fee for the services of its attorney including but not limited to trial and appeal and arbitration, in an amount to be determined by the court or the arbitrators, as the case may be.

Neither the right to recover interest on a payment nor the right to recover attorneys’ fees under this chapter are exclusive remedies. This chapter does not modify the remedies available to any person under the terms of a contract or by another statute.

The provisions of this chapter do not apply to improvements to real property intended for residential purposes which consist of 12 or fewer residential units.

The provisions of this chapter do not apply to contracts or subcontracts entered into prior to January 1, 1995.