In the construction industry, prompt payment acts are included in the property code of most states. These acts discourage slow or delayed payment to contractors, subcontractors, and suppliers by delineating the rights they have under the law. These rights (which generally include the right to payment including interest, recovery of legal fees, and the right to suspend work on projects) are protected, should an owner choose not to pay contractors according to the payment schedule set forth in legally binding contracts for construction projects.  

For the Texas construction industry, the state property code includes the Texas Prompt Payment Act. It was enacted to ensure that contractors, subcontractors, and suppliers are paid in a timely fashion for the goods and services they provide. The Texas Prompt Payment Act, found in Chapter 28 of the Texas Property Code, calls for prompt payment for any and all work performed on private, residential, and commercial projects. (Public works projects are addressed elsewhere in the state code.) Details for which contractors and subcontractors are responsible are also defined in the Act; because it is not only important to know what rights are protected, but also what obligations must be met by contractors and subcontractors so as not to nullify the protections provided to them by the Texas Prompt Payment Act.

The specific rights that are outlined in the Texas Prompt Payment Act include the requirement for prompt payment along the chain of all parties, which necessitates that owners pay in entirety all undisputed amounts owed to general contractors retained for their projects within 35 days of receipt of an official written request for payment from the contractor. Additionally, the general contractors are required to pay their subcontractors or suppliers within seven days of receiving their payment from the owner. The subcontractors are then obligated to pay any second-tier subcontractors who they have assisting with the project within seven days of receiving their payment from the general contractor. Any deviations from this payment schedule results in additional interest; added monthly, this interest accrues until payment is made in full. (Note: there are a few exceptions included in the Texas Prompt Payment Act that allow the withholding of payments by owners and the suspension of work by contractors or subcontractors. These exceptions are explained further in Sections 28.003 and 28.009 of the Act.) 

The Texas Prompt Payment Act provides invaluable legal protections for all parties contracted for the completion of construction projects. If you need a competent, reliable construction attorney to help you understand your rights under the Texas Prompt Payment Act, Reeves Law, PLLC can assist you; the professionals at Reeves Law can help you to navigate the complicated legal process for maintaining those rights. Located in Austin, Texas, the qualified team at Reeves Law is committed to providing personalized attention for every client and working to ensure the most favorable outcome possible in your construction law case. Contact Reeves Law for a free consultation and more information regarding litigation.