Ask the Legal Professionals, Phoenix Business Journal, August, 2012

Published on in News Articles

Q: If I’m the owner of a commercial building under construction, how does the Prompt Pay Act impact me?

A: The Prompt Pay Act, ARS §32-1129.01, requires 30 day billing cycles and fixes a set time for pay request approval and payment to contractors and subcontractors. The Act deems pay applications approved 14 days after submittal unless the Owner details the unapproved items in writing. Payment is required 7 days later. Amounts withheld on payments must relate to the items identified in the written objections. Interest accrues at 1.5% per month on unpaid balances. 

The victor in litigation or arbitration is awarded attorneys’ fees. Contractors and subcontractors can also suspend performance or terminate the contract in the event of non-payment. Owners or their agents need to monitor the payment process or be prepared for the consequences.

If I’m the owner of a commercial building under construction, how does the Prompt Pay Act impact me?