The proposed bill, General Assembly Committee Bill No. 5685, aims to prohibit "pay-if-paid" clauses in construction contracts and ensure timely payments to subcontractors and suppliers. It mandates that construction contracts include provisions requiring owners to pay all amounts due to contractors, subcontractors, and suppliers within specified timeframes—thirty days for owners and seven days or sixty days for contractors, depending on the circumstances. Additionally, it requires contractors to include similar payment provisions in their subcontracts. The bill also stipulates that no payments can be withheld from subcontractors or suppliers due to disputes between contractors.

Furthermore, the bill introduces a mechanism for claims related to unpaid amounts, requiring notice to be sent via registered or certified mail. It establishes that if payments are not made, interest will accrue at a rate of one percent per month, and funds may need to be placed in an escrow account upon demand. Importantly, any contract provisions that violate these requirements or attempt to waive rights under this section will be deemed void. The bill is set to take effect on October 1, 2025, and aims to enhance the financial security of those involved in construction projects by ensuring timely compensation.

Statutes affected:
Committee Bill: 42-158j