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Prompt Payment Laws, Liabilities & Legal Rights on Public and Private Construction Projects in California

Prompt-Payment-Laws-Liabilities-Legal-Rights-on-Public-and-Private-Construction-Projects-in-California.jpgContractors and subcontractors can benefit from prompt payment laws for both public and private construction projects in California. For private jobs, contractors and subcontractors can utilize prompt payment laws to receive progress payments and retention payments. For public jobs, contractors and subcontractors can utilize prompt payment laws to receive progress payments and prompt payment. These laws were put in place to protect contractors and subcontractors from failure to pay after a project is already completed. If you are a contractor or subcontractor in southern California, it would make sense to be familiar with the statutes and regulations that govern your industry. Familiarize yourself with the basics below and then contact a reputable real estate and land development attorney to ascertain additional details or deal with a current failure to pay.

Progress Payments on Private Jobs:

  • Contractors should receive payment from the owner of the site within 30 days from the original request for payment.
  • Subcontractors should receive payment within 10 days of when the contractor on the job receives payment on the job.
  • According to Prompt Payment laws, a 2% penalty is assessed each month.
  • Case law interprets the statute to include attorney fees.
  • The owner or contractor can withhold 150% of any disputed amount related to the job.

Retention Payments on Private Jobs:

  • Retention payments held by owner on a job should be released to the contractor within 45 days of completion of the project.
  • Subcontractors should receive retention payments held within 10 days of when the contractor receives retention release payment.
  • Owners have 10 days to accept or reject work from the point at which a request is made.
  • A penalty of 2% per month will be assessed according to Prompt Payment Laws.
  • Case law interprets the statute to include attorney fees.
  • In case of a dispute, the owner or contractor may withhold 150% of the disputed amount.

Progress Payments on Public Jobs:

Owner must pay contractor within 30 days of request for payment or invoicing with only a few exceptions.

Subcontractor should receive payment within 10 days of the date on which the contractor receives payment.

Penalty of 2% as well as attorney fees may be assessed for non-payment.

150% of the total amount may be withheld by the owner or contractor in case of a dispute.

Retention Payments on Public Jobs:

  • Retention payments held by owner on a job should be released to the contractor within 60 days of completion of the project.
  • Subcontractors should receive retention payments held within 7 days of when the contractor receives retention release payment.
  • A penalty of 2% per month will be assessed according to Prompt Payment Laws.
  • Case law interprets the statute to include attorney fees.
  • In case of a dispute, the owner or contractor may withhold 150% of the disputed amount.

Prompt Payment on Public Jobs:

  • Prime Contractor must receive payment within the 30 days following the submission of the Valid Pay Request.
  • The entity expected to pay has 7 days to dispute the validity of the request they received.
  • A penalty of 2% per month will be assessed according to Prompt Payment Laws.
  • Case law interprets the statute to include attorney fees.
  • In case of a dispute, the owner or contractor may withhold 150% of the disputed amount.
  • Interest is to be paid by the public entity involved at the legal rate.
  • Check the public entity's website for municipal codes and ordinances that are connected to prompt payment.

If you need assistance, with an issue of Prompt Payment on a southern California real estate development or project, contact the real estate development attorneys at The Law Office of Retz & Aldover LLP.

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Palos Verdes Estates, CA 90274

Phone: 424-282-3467
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