How quickly must construction payments be made under Prompt Payment Acts?
On federal projects, the Prompt Payment Act requires the government to pay approved progress invoices, and requires primes to pay subcontractors within 7 days of receiving payment. State prompt-payment acts set their own windows for private and public work, commonly 7 to 30 days after an approved pay application.
What interest do I get on a late construction payment?
Federal and most state prompt-payment statutes impose interest on late payments — the federal rate tracks the Treasury's published prompt-payment interest rate, while state acts set their own rate (often a fixed percentage per month or per annum). Interest generally runs from the day after payment was due.
Does prompt-payment interest apply to retainage?
Often yes. When retainage becomes due at substantial or final completion and the owner or prime fails to release it within the statutory window, prompt-payment interest typically begins to accrue on the withheld retainage.
Can an owner withhold payment and avoid interest?
Only for a properly disputed amount. Prompt-payment acts generally require the payer to pay undisputed amounts on time and to give timely written notice of the specific amounts in dispute. Withholding undisputed sums triggers interest and can waive the right to contest.