Source: https://www.levelset.com/resolve/prompt-payment/california-prompt-payment-law/
Timestamp: 2019-04-20 07:07:10
Document Index: 273337981

Matched Legal Cases: ['§ 8800', '§ 7108', '§ 7107', '§ 8800', '§ 8802', '§ 8810', '§ 8812', '§ 8814', '§ 8816', '§ 8818', '§ 8820', '§ 8822', '§ 7108', '§ 7107', '§ 10261', '§ 10262', '§ 10853']

California Prompt Payment Laws - FAQs and Resources | Levelset
California’s prompt payment statutes set forth specific timeframes when general contractors, subcontractors, suppliers, and others involved with a construction project must be paid. This page provides an overview of these regulations, and addresses some frequently asked questions related to the California prompt payment laws.
California Prompt Payment for Private Projects FAQs
California Prompt Payment FAQs
Do I Have To Send A Letter or File Anything To Qualify For Prompt Payment Penalties or Remedies in California?
The California prompt payment act applies upon pursuant to the terms of the contract, and upon the expiration of the timing requirements set forth by the statute.
Can I Include Prompt Payment Fees In My California Mechanics Liens Claim or Bond Claim?
No. California law does not allow for the recovery of miscellaneous amounts in a mechanics lien.
If payment is received late, and none of the valid reasons for late or extended payment apply, the party to be paid is entitled to recover the interest allowed by law. As a practical matter, it may be difficult to recover amounts in excess of the contractually due amount without filing suit. Attorney’s fees may only be recovered by a prevailing party in an action to recover wrongfully withheld funds.
Payment may be withheld in California for the following reasons:
Failure to comply with other material provisions of the construction contract,
Failure of a contractor or a subcontractor to make timely payments for labor, equipment and materials,
Damage to the owner,
California Prompt Payment for Public Projects FAQs
The California prompt payment act applies pursuant to the timing requirements set forth by statute. Interest is recoverable if amounts are wrongfully withheld, and attorneys’ fees are recoverable by the prevailing party in an action to recover wrongfully withheld funds.
No. California law does not allow for the recovery of miscellaneous amounts in a bond claim.
If payment is received late, and none of the valid reasons for late or extended payment apply, the party to be paid is entitled to recover the interest allowed by law. As a practical matter, it may be difficult to recover amounts in excess of the contractually due amount without filing suit. Attorneys’ fees may only be recovered by a prevailing party in an action to recover wrongfully withheld funds.
Payment may be withheld in California pursuant to a bona fide dispute over the amount due.
California Prompt Payment Statutes
Getting informed about prompt payment laws is important. An examination of California prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. California specific laws can be found in: Cal. Civ. Code §§ 8800 – 8802, 8810 – 8822; Cal. Bus. & Prof. Code § 7108.5 , and Pub. Cont. Code §§ 7107, 10261.5, 10262.5, 10853, and are reproduced below.
Cal. Civil Code § 8800:
Cal. Civil Code § 8802:
Cal. Civil Code § 8810:
This article governs a retention payment withheld by an owner from a direct contractor or by a direct contractor from a subcontractor.
Cal. Civil Code § 8812:
Cal. Civil Code § 8814:
a) If a direct contractor has withheld a retention from one or more subcontractors, the direct contractor shall, within 10 days after receiving all or part of a retention payment, pay to each subcontractor from whom retention has been withheld that subcontractor’s share of the payment.
Cal. Civil Code § 8816:
(a) If the direct contractor gives the owner, or a subcontractor gives the direct contractor, notice that work in dispute has been completed in accordance with the contract, the owner or direct contractor shall within 10 days give notice advising the notifying party of the acceptance or rejection of the disputed work. Both notices shall comply with the requirements of Chapter 2 (commencing with Section 8100) of Title 1.
(b) Within 10 days after acceptance of disputed work, the owner or direct contractor shall pay the portion of the retention relating to the disputed work.
Cal. Civil Code § 8818:
Cal. Civil Code § 8820:
Cal. Civil Code § 8822:
This article does not apply to a retention payment withheld by a lender pursuant to a construction loan agreement.
Cal. Bus. & Prof. Code Section § 7108.5:
(a) A prime contractor or subcontractor shall pay to any subcontractor, not later than seven days after receipt of each progress payment, unless otherwise agreed to in writing, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor’ s interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor to a subcontractor, the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount.
Cal. Pub Cont. Code § 7107 :
Cal. Pub Cont. Code § 10261.5:
(a)Any state agency which fails to make any progress payment within 30 days after receipt of the payment request from a contractor on a construction contract for an undisputed payment request, which was properly submitted by the contractor to the agency, shall pay interest to the contractor equivalent to the legal rate set forth in subdivision (a) of Section 685.010 of the Code of Civil Procedure. Any state agency which independently calculates the amount due on a progress payment and which fails to make a progress payment within 30 days of the first submittal of the estimate for each contract by the engineer, shall pay interest to the contractor equivalent to the legal rate set forth in subdivision (a) of Section 685.010 of the Code of Civil Procedure. In the event that the payment is not made within 30 days of receipt of the contractor’s request or the first submittal by the engineer, and the Controller has processed the payment within 14 days of receipt of the request or submittal, the contracting state agency shall pay interest to the contractor equivalent to the legal rate set forth in subdivision (a) of Section 685.010 of the Code of Civil Procedure. In the event that the payment is not made within 30 days of receipt of the contractor’s request or the first submittal by the engineer, and the contracting state agency has processed the payment within 16 days after receipt of the request or submittal, the Controller shall pay interest as provided in Section 685.010 of the Code of Civil Procedure.
For purposes of this section, a payment request shall be considered properly executed if funds are available for payment of the payment request, and payment is not delayed due to an audit inquiry by the Controller.
(b)Upon receipt of a payment request, each agency shall require:
(1)That each payment request be reviewed as soon as practicable after receipt for the purpose of determining that a payment request is a proper payment request.
(2)Any payment request determined not to be a proper payment request suitable for payment shall be returned as soon as practicable, but not later than seven days, after receipt, specifying the reasons that the payment request is not a proper payment request.
(3)The number of days available to a state agency to make a timely payment of payment request without incurring interest shall be reduced by the number of days by which an agency exceeds the requirements of paragraph (2).
Cal. Pub Cont. Code § 10262.5:
(a)Notwithstanding any other provision of law, a prime contractor or subcontractor shall pay to any subcontractor, not later than 10 days of receipt of each progress payment, the respective amounts allowed the contractor on account of the work performed by the subcontractors, to the extent of each subcontractor’s interest therein. In the event that there is a good faith dispute over all or any portion of the amount due on a progress payment from the prime contractor or subcontractor to a subcontractor, then the prime contractor or subcontractor may withhold no more than 150 percent of the disputed amount.
(b)This section shall not be construed to limit or impair any contractual, administrative, or judicial remedies otherwise available to a contractor or a subcontractor in the event of a dispute involving late payment or nonpayment by a contractor or deficient subcontract performance or nonperformance by a subcontractor.
(c)On or before September 1 of each year, the head of each state agency shall submit to the Legislature a report on the number and dollar volume of written complaints received from subcontractors and prime contractors on contracts in excess of three hundred thousand dollars ($300,000), relating to violations of this section.
Cal. Pub Cont. Code § 10853:
(a)If the trustees fail to make a progress payment on a contract within 39 days after receipt of an undisputed and properly submitted payment request from a contractor on a construction contract, the trustees shall pay interest to the contractor equivalent to the legal rate set forth in subdivision (a) of Section 685.010 of the Code of Civil Procedure. If the payment is not made within 39 days of receipt of the contractor’s request, and the Controller has processed the payment within 14 days of the receipt of the request, the trustees shall pay interest to the contractor equivalent to the legal rate as provided in subdivision (a) of Section 685.010 of the Code of Civil Procedure. If the payment is not made within 39 days of receipt of the contractor’s request, and the trustees have processed the payment within 25 days after the receipt of the request, the Controller shall pay interest equivalent to the legal rate as provided in subdivision (a) of Section 685.010 of the Code of Civil Procedure.
(b)Upon receipt of a payment request, the trustees shall act in accordance with the following:
(1)Each payment request shall be reviewed by the trustees as soon as practicable after receipt for the purpose of determining that the payment request is a proper payment request.
(2)Any payment request determined not to be a proper request suitable for payment shall be returned to the contractor as soon as practicable, but not later than seven days after receipt. A request returned pursuant to this paragraph shall be accompanied by a document setting forth in writing the reasons why the payment request is not proper.
(3)Upon request from the trustees, the Controller may elect to expedite each payment request and may charge the trustees an appropriate amount, as determined by the Controller, for costs incurred in expediting the payment request.
(c)The number of days available to the trustees to make a payment without incurring interest shall be reduced by the number of days by which the trustees exceed the seven-day return requirement set forth in paragraph (2) of subdivision (b).
(d)A properly submitted payment request shall be defined as the date upon which the trustees receive a payment request, certified in accordance with the contract, at the address identified in the contract.
(1)A “progress payment” includes all payments due contractors, except that portion of the final payment withheld pursuant to Section 10851.
(2)A payment request shall be considered properly executed if funds are available for payment of the payment request and payment is not delayed due to an audit inquiry by the Controller.