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, or suppliers within thirty days of a written payment request. Additionally, contractors must pay subcontractors and suppliers within seven days of receiving payment from the owner or within sixty days of the labor or materials being provided, whichever comes first. The bill also requires contractors to include similar payment provisions in their subcontracts.

Furthermore, the bill establishes a process for claims related to unpaid amounts, including the requirement for notice via registered or certified mail. It stipulates that no payments can be withheld from subcontractors or suppliers due to disputes between contractors. The bill also introduces penalties for owners, contractors, or subcontractors who unreasonably withhold payments, including the potential for interest and damages. Notably, 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.

Statutes affected:
Committee Bill: 42-158j