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Prompt Pay

The Arizona Registrar of Contractors outlines the Prompt Pay statutes and rules, detailing the processes for progress payments, the owner's right to withhold payment, and the contractor's duty to pay subcontractors. It specifies timelines for billing, approval, and payment, as well as the rights of contractors and subcontractors to suspend performance due to non-payment. Additionally, it highlights the consequences for failing to comply with these payment regulations, including potential disciplinary actions and interest on late payments.

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52 views1 page

Prompt Pay

The Arizona Registrar of Contractors outlines the Prompt Pay statutes and rules, detailing the processes for progress payments, the owner's right to withhold payment, and the contractor's duty to pay subcontractors. It specifies timelines for billing, approval, and payment, as well as the rights of contractors and subcontractors to suspend performance due to non-payment. Additionally, it highlights the consequences for failing to comply with these payment regulations, including potential disciplinary actions and interest on late payments.

Uploaded by

HIEN PHAM
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Arizona Registrar of Contractors

Statutes and Rules Exam

Prompt Pay

Progress Payments by Owner


• Progress payments shall be billed on a 30-day cycle. A.R.S § 32-1182(A)

• The bill for a progress payment is considered approved 14 days after it is submitted to the owner (unless the owner
gives written justification for refusing to approve all or part of the bill). A.R.S § 32-1182(D)

• Bills for progress payments must be paid within 7 days of when they’re approved. A.R.S § 32-1182(D)

Owner’s Right to Withhold Payment


• Owners may retain or withhold all or part of a progress payment if they give notice in writing within 14 days of receiving
the bill or estimate. Payment may only be withheld for the reasons listed in A.R.S § 32-1182(D).

Contractor’s Duty to Pay


• Contractors and subcontractors who are paid on time must pay subcontractors and suppliers within 7 days of receiving
payment. A.R.S. § 32-1183(B)

If the Owner Withholds Payment…

• The owner’s written notice must be provided to subcontractors and suppliers within 7 days. A.R.S. § 32-1183(F)

• If work done by the subcontractor or supplier is not the cause for owner’s retention, the contractor must pay them
within 21 days of when the owner would have paid. A.R.S. § 32-1183(G)

Contractor’s Right to Withhold Payment


• Contractors have the right to decline to certify and approve all or part of a bill and must do so in writing within 14 days
of receiving an invoice. Payment may only be withheld for the reasons listed in A.R.S § 32-1183(C).

Right to Suspend Performance


• A contractor who hasn’t been paid on time can suspend performance or terminate the contract with 7 days’ notice.
A.R.S. § 32-1185(A)

• A subcontractor who hasn’t been paid on time because the contractor wasn’t paid can suspend performance or
terminate the contract with 3 days’ notice. A.R.S. § 32-1185(B)

• A subcontractor who hasn’t been paid on time by a contractor who was paid can suspend performance or terminate the
contract with 7 days’ notice. A.R.S. § 32-1185(C)

Consequences for Failure to Comply with Prompt Pay


• Discipline against license: Failure to make timely payments to subcontractors and suppliers can be used as grounds for
suspending or revoking a license. A.R.S. § 32-1183(B)

• Legal fees: The contractor may owe legal fees to a person who wins a claim under Prompt Pay. A.R.S § 32-1183(J

• Interest: A monthly interest rate of at least 1.5% will be applied to late payments. A.R.S. § 32-1183(H)

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