Payment of Contractors and Subcontractors by Owner
A little known statute in Pennsylvania provides the framework requiring Contractor and Subcontractor payment. In 1994, Pennsylvania enacted the Contractor and Subcontractor Payment Act. The Act requires timely payment to contractors and subcontractors, remedies and damages. Performance by a contractor or subcontractor in accordance with the provisions of a contract entitles the contractor or subcontractor to payment from the party with whom the contractor or subcontractor has contracted. The Act requires adherence to the contract. If there is no provision in the contract for the time of payment, payment must be made in twenty days. After 27 days, interest automatically begins to accrue at the rate of 12% per year.
Payment of Subcontractors by Contractors
Pennsylvania Law requires timely payment of Subcontractors by General Contractors. If a Subcontractor performs his obligations under a contract with the General Contractor, he is entitled to timely payment. A General Contractor is obliged to disclose to a Subcontractor, before a subcontract is executed, the due date for receipts of payments from the Property Owner. If the disclosure is not made, then the General Contractor is required to make payment as if the owner had paid within 34 days regardless of whether the owner actually paid or not. If the date of payment is disclosed and received, a General Contractor is required to pay the Subcontractor within 14 days of receipt. After 21 days, the Subcontractor may charge interest at the rate of 12% per year.
How to get paid:
Pennsylvania Law assesses a 12% per year penalty and attorneys fees for violations of the Pennsylvania Contractor and Subcontractors Payment Act. In other words, in addition to the amounts owed to the contractor or subcontractor, the Defendant who violated the Contractor and Subcontractor Payment Act must pay the Contractor or Subcontractor’s expenses, attorneys fees, damages, and costs plus 12% interest. Patberg, Carmody, Ging & Fillippi has successfully litigated these claims and represents Contractors and Subcontractors in all areas of construction law.