Prompt Payment to Contractors and Subcontractors

If you are a contractor or subcontractor and need to get paid for the job there is a statute that can help you get interest on your payment under the Texas Property Code Section 28 “Texas Prompt Payment” Act. Below is the statute.

Sec. 28.002. PROMPT PAY REQUIRED.

(a) If an owner or a person authorized to act on behalf of the owner receives a written payment request from a contractor for an amount that is allowed to the contractor under the contract for properly performed work or suitably stored or specially fabricated materials, the owner shall pay the amount to the contractor, less any amount withheld as authorized by statute, not later than the 35th day after the date the owner receives the request.

(b) A contractor who receives a payment under Subsection (a) or otherwise from an owner in connection with a contract to improve real property shall pay each of its subcontractors the portion of the owner’s payment, including interest, if any, that is attributable to work properly performed or materials suitably stored or specially fabricated as provided under the contract by that subcontractor, to the extent of that subcontractor’s interest in the owner’s payment. The payment required by this subsection must be made not later than the seventh day after the date the contractor receives the owner’s payment.

(c) A subcontractor who receives a payment under Subsection (b) or otherwise from a contractor in connection with a contract to improve real property shall pay each of its subcontractors the portion of the payment, including interest, if any, that is attributable to work properly performed or materials suitably stored or specially fabricated as provided under the contract by that subcontractor, to the extent of that subcontractor’s interest in the payment. The payment required by this subsection must be made not later than the seventh day after the date the subcontractor receives the contractor’s payment.

An unpaid amount required under this chapter begins to accrue interest on the day after the date on which the payment becomes due.
(b) An unpaid amount bears interest at the rate of 1-1/2 percent each month.
(c) Interest on an unpaid amount stops accruing under this section on the earlier of:
(1) the date of delivery;
(2) the date of mailing, if payment is mailed and delivery occurs within three days; or
(3) the date a judgment is entered in an action brought under this chapter.

If you file a lawsuit and prove a violation of the Act, then in addition to the interest rate penalty, the court is also authorized to award costs and reasonable attorneys’ fees.

If you need to send a prompt payment letter and demand payment for work done on a project call the Law Offices of Alex R. Hernandez Jr. 1-888-HDZ-LAW-8