Prompt Payment to Contractors on Private Projects

Texas law generally requires the owner of a private construction, improvement, or demolition project to promptly pay the contractor for the contractor’s work. Specifically, upon receipt of a written payment request from the contractor for an amount owed under the contract for properly performed work (or suitably stored or specially fabricated materials), the owner must pay the amount to the contractor, less any amount withheld as authorized by statute, not later than the 35th day after the date the owner receives the request.texas prompt payment act

However, an exception to timely and full payment arises when a good faith dispute exists concerning the amount owed for a payment requested, including whether the work was performed in a proper manner. In this situation, the amount that may be withheld from payment is statutorily prescribed and varies based on the type of project at issue.

Disagreements frequently arise as to whether work was properly performed and whether, therefore, a contractor is entitled to prompt payment, in whole or in part.

A contractor may have the right to claim additional interest, suspend work, and bring suit under the Prompt Payment Act to enforce payment.

A party to a lawsuit under the Prompt Payment Act may ask to recover from the opposing party its reasonable, equitable, and just legal fees.

In our Law 101 posts, we define terms, phrases, or concepts with the goal of conveying core information in order to set the stage for more complex discussions.

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