Ohio's Prompt Payment Act:
Getting paid on construction projects
Description of law
The prompt payment law requires contractors
to pay lower tier subcontractors or suppliers that portion
of the payment to the contractor that represents the work
done by the contractor or the supplies provided by the supplier,
minus retainage, within ten days of receiving payment for
the lower tier subcontractor's work. Ohio Rev. Code 4113.61.
Complying with statutory prerequisites
In order to succeed in a claim under the prompt
payment law, the subcontractor or materialman must:
- have a valid and enforceable contract claim;
- have submitted an accurate invoice to a
contractor for payment for work or materials, allowing the
contractor a sufficient time to include the invoice in the
contractor's invoice to the owner;
- establish that the contractor was paid
for the invoice submitted after the submission of the subcontractor's
or materialman's invoice;
- establish that the owner paid money to
the contractor for work completed by the subcontractor or
for materials delivered by the materialman;
- establish that the contractor has refused
to timely pay the subcontractor or materialman an amount
equal to the percentage of completion allowed by the owner;
and
- establish that there is no valid reasons
for the contractor to withhold any amount necessary to resolve
disputed claims involving the work or materials.
Damages available under the prompt payment law
A subcontractor or materialman may recover
interest at 18% per annum, costs, and attorneys fees, in the
event that a violation of the prompt payment law is established.
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Fortney
& Klingshirn
4040 Embassy Parkway, Suite
280
Akron, Ohio 44333
telephone 330-665-5445 - fax 665-5446
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