Subcontractor Payment Rights: What Can You Do When Payment Is Late?
It doesn’t matter how good they are at their trade or how well they run their business — subcontractors have a tough time getting paid. Even if you finish a...
Prompt Payment
Prompt payment requirements establish a time period in which property owners or GCs must make payments to contractors and subcontractors. This is the page for articles about prompt payment. If you need help with prompt payment in your state, then you’re in the right place!
In construction, the average payment takes nearly three months; the longest of any industry. State and federal requirements attempt to ensure that parties to a construction project receive payment within a reasonable amount of time.
Federal and state prompt payment laws
The federal Prompt Payment Act applies to federal construction contracts. It requires that these contracts include a clause requiring the prime contractor to pay subcontractors for “satisfactory” work within seven days of being paid by the government.
States have their own prompt payment laws. These laws seek to reduce the time it takes for contractors, subcontractors, and suppliers to receive payment for the work and materials they provide. Laws and regulations try to establish a timeline for construction payments that is fair and reasonable for the people providing work and materials on a project.
In general, these requirements apply universally to public projects, i.e. state and federal construction jobs. Laws in some states apply these requirements to private projects as well.
Prompt payment requirements are not always cut-and-dry. The laws create a timeline for payment that often starts when a party receives a “proper” or “undisputed” invoice. As a result, the interpretation of the requirements can be quite subjective. In spite of this, with a little time and research, you can learn how to use prompt payment to get paid on any construction project. To ask your own questions about prompt payment and get legal advice from construction attorneys entirely for free, check out the Expert Center page for prompt payment.
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