Minnesota Prompt Payment Requirements
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For Prime Contractors, payments due monthly. Can be modifed by contract.
For Subcontractors, payment due within 20 days of receipt of payment from above.
For Suppliers, payment due within 20 days of receipt of payment from above.
Interest & Fees
Interest at 1.5% month. Attorneys' fees awardable if party requesting payment prevails in a civil action - so presumably settlement or payment after demand does not warrant attorneys' fees.
For Prime (General) Contractors, progres spayments due monthly (can be modified by contract); within 35 or 45 days of invoice for localities depending on if the do/don't have regularly scheduled meetings; payment due 30 days after invoice for projects for University of MN.
For Subcontractors, payment due within 10 days of the receipt of payment from above. Only applicabl;e to first-tier subs.
For Suppliers, payment due within 10 days of the receipt of payment from above. Only applicabl;e to first-tier subs.
Interest & Fees
Interest at 1.5% month; attorneys' fees who prevails in a civil action and shows bad faith by non-paying party.
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 Minnesota
The Minnesota prompt payment provisions are split into two sections, covering both private and public projects. These statutes govern the timing of all payments on construction projects, and impose penalties for late payment in the form of interest.
Payments on all Minnesota private construction projects are regulated under Minn. Stat. §337.10, and the rules are very straightforward.
Payment Deadlines for Private Projects
Progress payments from the property owner to the prime contractor must be made on a monthly basis, unless the contract between the parties provides for different payment terms. Once the prime contractor has received payment, they are required to pay their subs and suppliers within 10 days. The same 10-day payment deadline applies to all other payments down the chain.
Penalties for Late Payment on Private Projects
Any late or wrongfully withheld payments will be subject to interest accruing at a rate of 1.5% per month. However, the monthly interest penalty will be a minimum of $10 for unpaid balances of at least $100 or more. Furthermore, if the dispute goes to court, the prevailing party will be awarded costs and attorney fees.
Payments on Minnesota public works projects are governed by a few different statutes depending on the public entity that contracted the project. These are Minn. Stat. Ann §§15.71-74, 16A-124, 16A-1245, 471.425, 137.36, and 142.
Payment Deadlines for Public Projects
Regarding payments from the public entity to the prime contractor, almost all public works projects in Minnesota require payment to be made within 30 days of receipt of a proper request for payment.
As for those contracted by local governments (municipalities), are regulated by the terms of the contract. If silent, the due dates for payments to the prime contractor depends on how often the municipality’s governing board meets. If the board meets at least once a month, then 35 days from receipt of a request for payment; if the board doesn’t meet at least once a month, then 45 days from receipt of the request. For all other payments to subcontractors, regardless of the contracting entity, are due within 10 days of the prime contractor’s receipt of payment from the public entity. This deadline only applies to the first tier subs and suppliers.
Penalties for Late Payment on Public Projects
If an undisputed payment is late or wrongfully withheld, the unpaid balance will accrue interest at a rate of 1.5% per month until payment is made. Also, in a civil action to enforce a claim under the prompt payment provisions, the court will award reasonable attorney fees if the non-paying party is found to have acted in bad faith.