AN ACT PROHIBITING PAY-IF-PAID CLAUSES IN CONSTRUCTION CONTRACTS AND ENSURING TIMELY PAYMENT OF CONSTRUCTION SUBCONTRACTORS AND SUPPLIERS.
What changed between versions
Payment timelines were changed from a two-tier system (7 days or 60 days) to a more structured system requiring owner payment within 30 days of request and contractor payment within 7 days of receiving owner payment or 60 days after work completion, whichever is sooner.
New requirement that all construction contracts must include specific payment clauses mandating timely payment to contractors, subcontractors, and suppliers.
New requirement that payment requisitions must include a detailed statement showing the status of all pending change orders and directives.
Added requirement that contractors must include payment terms in their subcontracts requiring subcontractors and suppliers to pay their own downstream parties within 25 days of receiving payment.
New enforcement mechanism requiring registered or certified mail notices for payment disputes, with liability for interest at one percent per month starting ten days after notice receipt.
New escrow requirement where non-paying parties must place disputed funds in an interest-bearing escrow account upon written demand, with exceptions for substantial performance issues.
New penalty for bad faith withholding of payments, including ten percent damages in addition to interest and attorneys' fees.
Added explicit definition of 'pending construction change order' as an authorized directive for extra work issued to a contractor or subcontractor.
