South Dakota Prompt Payment Overview
South Dakota does not address private projects in its statute, but it does address public projects.
South Dakota Prompt Payment for Public Projects FAQs
South Dakota’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 South Dakota prompt payment laws.
Prompt Payment Frequently Asked Questions
In order for the provisions of the South Dakota prompt pay statutes to apply, the party requesting payment must be entitled to payment pursuant to the terms of the contract. If the contract doesn’t specify an exact time at which a party is entitled to payment, the clock starts running upon written acceptance of the labor and/or material furnished as well as the furnishing of an invoice covering same.
No. South Dakota doesn’t allow miscellaneous amounts to be included on the face of a bond claim.
There is no specific requirement for interest to being to accrue on late payments in South Dakota other than the requirement that the payment must be late pursuant to the prompt pay statute.
South Dakota allows payments to be withheld if the amount due is disputed, or if there is a dispute over compliance with t he contract. However, if the payments are withheld, written notice of the details of the dispute must be delivered to the party requesting payment.
South Dakota Prompt Payment Statutes
Getting informed about prompt payment laws is important. An examination of South Dakota’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. South Dakota’s specific laws can be found in: S.D. Codified Laws §§ 5-26-1 – 5-26-8, and are reproduced below.
Prompt Payment Statute on Private Projects
South Dakota does not address prompt payment for private jobs in its statute.
Prompt Payment Statute on Public Projects
Deadlines for payments. An agency which acquires property or services pursuant to a contract with a business shall pay for each complete delivered item of property or service on the date required by contract between the business and agency or, if no date for payment is specified by contract, within forty-five days after receipt and written acceptance of property or services and receipt of the invoice covering the delivered items or services.
Payment of less than five dollars in interest prohibited. No agency is required to pay interest due because of late payment if the interest is less than five dollars.
Additional appropriations for interest prohibited. An agency may not seek additional appropriations to pay interest which accrues as a result of its failure to make timely payments required by § 5-26-2.
Disputed payments exempt–Notice of dispute required. This chapter is not applicable if an agency’s failure to timely pay interest required by § 5-26-3 is the result of a dispute between the agency and the business over the amount due or over compliance with the contract. In case of dispute, the agency shall, within ten days of receipt of property or services and receipt of invoice, give written notice to the business of disagreement with property or services. The notice shall include the reasons for and other pertinent details of the dispute and a copy of the notice shall be timely filed with the state auditor or treasurer or finance officer of the agency.
Time for payments to subcontractors and suppliers–Interest on overdue amounts–When payments due. Upon payment by an agency, a business which has acquired under contract, property or services in connection with its contract with such agency from a subcontractor or supplier, shall pay the subcontractor or supplier within thirty days after receiving payment from the agency. Interest at the rate of one and one-half percent per month shall accrue and is due any subcontractor or supplier who is not paid within thirty days after the business receives payment from the agency, unless otherwise provided by contract between the business and the subcontractor or supplier. Interest begins to accrue on the thirty-first day at the rate specified in this section. Payment shall be due when the subcontractor or material supplier have satisfied the terms of their contract or material delivery agreement.
This chapter may be cited as the South Dakota Prompt Payment Act.
The provisions of this chapter do not apply to transactions between government agencies unless otherwise authorized by statute.