Construction LawLitigationZinnLaw Construction Contract Prompt Payment Act

As a construction contractor, resolving a matter of late payment or lack of payment on a public construction project may fall under the Construction Contract Prompt Payment Act. Any overdue payment begins to start accruing interest following the 15th day that it is late or goes unpaid. There are a few more logistical hurdles when dealing with a public project, however, the general process is the same and begins with filing a complaint.

This complaint should include the following information:

  • A contract stipulating you are providing labor and/or materials to improve a real property
  • Full description of the labor and/or materials, along with a statement that labor and materials were provided in accordance with terms of the aforementioned contract
  • The total price of the contract along with the amount of money received in payment, if any
  • The amount of unpaid money still to be accounted for, along with a statement that the money has been due for more than 30 days.

After you file the complaint, the matter goes to court for an evidentiary hearing, which should be completed within 15 days of when the other party in the dispute receives written notice. This hearing constitutes an abbreviated version of a trial process, where a presiding judge will review evidence from both parties, then make a decision.

If you succeed on your claim for non-payment against a government entity, the resolution could include an accounting of the disputed payment, a temporary injunction, or any one of a number of remedies that the judge deems appropriate and applicable to resolve the matter and render payment to the party that prevails in the hearing.

Can payments be withheld for some reason?

The paying party, whether it is the primary contractor or the government client, may withhold final payment only if there is a bona fide dispute, a material breach of contract or an improper pay application. Here’s what those three reasons mean:

  1. An improper application for payment, such as a request or invoice, has been given.
  2. There is a dispute over the amount of money owed, or the work performed on the project.
  3. A material breach of contract, defined as one that renders the written agreement “irreparably broken.”

If there is a dispute over payment, the payor may only withhold the amount that is in question, which means they cannot withhold payment for labor or materials that were furnished and are not in dispute unless the contract states otherwise. Contact Brian Zinn at ZinnLaw for a consultsation.