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When prompt payment of construction contracts is required?

On Behalf of | Apr 9, 2014 | Business Construction Law

Last week we wrote about some of the unique qualities of Oregon’s Prompt Payment Statute that provides recourse for construction subcontractors and contractors when an owner or contractor fails to pay on time. Though it can be particularly harsh, the statute’s penalties will not always apply all of the time.

You should contact a construction law attorney to determine if your construction contracts are subject to Oregon’s Prompt Payment Statute.

Of course, paying your contractors on time every time would be ideal. As anyone in the construction business will tell you, however, that is not always an economic possibility. In those situations, failure to tender prompt payment will not always result in penalties. Any given project can contain a number of different contracts that do and do not fall under the Prompt Payment Statute.

When Oregon’s Prompt Payment Act does apply, it requires owners and contractors to make progress payments to contractors and subcontractors only on construction projects that are anticipated to last 60 days or longer.  For example, a contract to have someone paint your roof would likely not be anticipated to take 60 days. On the other hand, if you’ve hired a contractor to build a home, that contract is likely the kind to which the statute will apply.

The statutes application, however, will not always be so obvious. In many construction contracts, contractors are hired to do a number of different jobs, with different timetables for each task’s completion. Additionally, the anticipated time it may take to complete a construction project can be difficult to determine. You should contact a construction law attorney who can help you to review your construction contracts and avoid the Prompt Pay statute’s harsh penalties.