Contractor Down Payment Terms by State: A Comprehensive Guide

In the United States, contractor down payment terms vary significantly from state to state. Some states have strict regulations, while others leave it up to the contractor and homeowner to negotiate.

In California, contractors are required to provide a written estimate and a detailed breakdown of the costs involved, including any down payments. This helps homeowners make informed decisions and avoid potential scams.

For homeowners in Florida, the maximum down payment allowed is 10% of the total contract price, unless the contractor can provide a written justification for the larger down payment. This protects homeowners from being taken advantage of.

In Texas, contractors are not allowed to require a down payment until the contract has been signed and the work has begun. This gives homeowners more control over the payment process.

Maine requires payment to be due within 20 days after delivery of invoice, unless otherwise agreed upon.

In Michigan, payment is due within 30 days after the architect/engineer has certified the work in place, or 15 days of receipt of funds if received from a different federal or state agency.

New Mexico has a 21-day window for progress payments and a 10-day window for final payment after certified completion.

South Dakota allows 45 days for payment from receipt of payment request, unless otherwise agreed upon, and 30 business days for payment after the General Contractor and Subcontractor receive payment.

Late payments in Maine can accrue interest at the statutory judgment rate, and the court can award an additional 1% per month on all payments wrongfully withheld.

In South Dakota, late payments accrue at a rate of 1.5% per month, and payments can be withheld if there is a dispute over compliance with the contract or amount due.

Maine's prompt payment statutes require retainage to be paid within 30 days of final acceptance of the work, and recovering interest penalties requires arbitration or litigation.

If you're a general contractor, it's essential to understand the down payment terms in your state, as they can significantly impact your cash flow and relationship with the public entity. In Arizona, for example, progress payments are due within 14 days after invoice approval, and final payment is due within 60 days of accepting the completed work.

In California, progress payments are due within 30 days after receiving a payment request, and final payment is due within 60 days of project completion. After receiving payments, general contractors have 7 days to pay subcontractors, and subcontractors have 7 days to pay suppliers.

In Michigan, payment is due within 30 days after the architect/engineer has certified that the work in place is the portion covered by the payment request. If the public entity receives funds from a different federal or state agency, payment is due within the default 30 days or 15 days of receipt of funds, whichever is later.

Here's a breakdown of the payment terms for general contractors in each state:

Remember, these terms can be modified by contract or agreement, so it's crucial to review your specific contract to understand your obligations and rights.

In Alaska, payment is due within 30 days after receipt of payment request, unless grant money is used, in which case payment is due within 21 days from delivery of invoice or public entity's receipt of grant funds.

Payments are considered made when they are mailed or personally delivered, and must be endorsed for payment to be considered received.

If a payment request or performance doesn't comply with the contract terms, the entity or general contractor must notify the party requesting payment within 8 days in writing, stating the amount being withheld and the required remedial actions.

The interest rate for late payments in Alaska is 10.5% per year, and accrues 21 days after the payment due date for general contractors.

For other parties, interest accrues from the first day of late payment.

In Alaska, prompt payment laws apply after the completion and acceptance of work, and payment must have been requested.

After receiving payments, the general contractor must pay the subcontractor within 8 days, and the subcontractor must pay the suppliers within 8 days.

In California, the payment schedule is included in the contract under the section entitled “Schedule of Progress Payments,” which outlines the date, amount due, and what work the payment covers.

A progress payment schedule allows homeowners to pay the contractor as the project moves forward, ensuring they see the progress made and don't have to pay for everything at once.

In California, progress payments are due within 30 days after receiving a payment request, and final payment is due within 60 days of project completion.

Payment may be withheld if there is a dispute over the amount due, and the interest rate for late or improperly withheld payments to general contractors is 10% per year, while for subcontractors and suppliers, it's 2% per month.

In Hawaii, payment is due within 30 days of a payment request or project completion, whichever is later, and after the General Contractor receives payments, progress payments are due within 10 days to the Subcontractor.

For late payments in Hawaii, an interest rate of 2% per month plus the prime rate applies after 30 days, and for late or wrongfully withheld payments to the subcontractor, the interest rate is 1.5% per month.

In Kansas, payment is due within 30 days from receipt of payment request, but can be extended to 45 days under extenuating circumstances, and for late and wrongfully withheld payments, the interest rate is set at 1.5% per month.

Kansas also has an interest rate of 18% per year under the Kansas Fairness in Public Construction Contract Act, which can be awarded to the party if they request it within 4 months from the payment deadline.

In Minnesota, payment is due within 30 days from receipt of a correct payment request, and if contracted by local governments, payments are regulated by the contract terms.

For late or wrongfully withheld payments in Minnesota, the unpaid balance will accrue interest at a rate of 1.5% per month, and if the party is found to have acted in bad faith, the court will award reasonable attorney fees.

In South Dakota, payment is due within 45 days from receipt of payment request, unless otherwise agreed upon, and after the General Contractor receives payment, payment is due within 30 business days to the Subcontractor.

For late or wrongfully withheld payments in South Dakota, the late payment will accrue at a rate of 1.5% per month, and payments can be withheld if there is a dispute over compliance with the contract or amount due.

In Colorado, progress payments are due by the end of the month or as soon as possible thereafter.

If the contractor or subcontractor is late with payment, they'll be charged an interest rate of 15% per year, or the rate stated in the contract, whichever is higher.

Colorado's prompt payment laws apply to all public construction projects over $150,000.

For late payments from the public entity to the general contractor, the interest rate will follow the terms of the contract.

To receive prompt payment, subcontractors must submit a list of their subcontractors, suppliers, etc., with their request for payment.

In Iowa, progress payments are due within 14 days of receipt of the payment request.

Payment timelines are strict, with final payment due within 40 days from completion and acceptance of work.

After receiving payments, the general contractor must pay the subcontractor within 7 days.

This 7-day payment rule only applies to first-tier project participants, and other payments will follow the terms in the contract.

For late or wrongfully withheld payments, interest will accrue at a rate set by the Iowa State Treasury, starting from the day the payment becomes late.

Interest payments received by the contractor must be shared with subcontractors, with the amount proportional to the subcontractor's work.

Attorney fees may also be awarded to the unpaid party in some cases.

General contractors in Iowa can modify progress payment due dates by up to 30 days after invoice, or up to 50 days after acceptance for final payment.

To receive payment, subcontractors must demonstrate satisfactory performance of their work, as per Iowa's prompt pay statutes.

In Louisiana, progress payments for construction projects are due according to the terms in the contract. For highway projects, progress payments are due 30 days after invoice.

Final payment for construction projects in Louisiana is due within 45 days from receipt of a clear lien certificate. For highway projects, final payment is due 45 days after substantial completion of the project.

After the General Contractor receives payment, they must pay the Subcontractor within 14 business days. Similarly, after the Subcontractor receives payment, they must pay the Suppliers within 14 business days.

Late and wrongfully withheld payments in Louisiana will accrue interest at 0.5% per day, but cannot exceed 15% of the payment due. Attorney fees may be awarded to the prevailing party in such cases.

In Nebraska, payment is due within 45 days after receipt of a payment request or receipt of services, whichever is later.

Goods or services are considered "received" when they are actually accepted by the agency.

The interest rate for late payments is the average short-term borrowing rate during July of the previous year rounded to the nearest whole percentage plus 3%.

The general contractor must request interest within 90 days from the payment due date to collect interest penalties.

Payments may be withheld due to a good faith dispute, and the hiring party must provide notice of the dispute before the payment due date.

The Prompt Payment Act goes back in effect on the date that the dispute is resolved.

In Nevada, progress payments are due within 30 days of receipt of invoice.

The final payment is due within 30 days of either occupancy, use, or notice of completion, whichever is earlier.

After the hiring party receives payment, payment is due within 10 days to the Subcontractors and Suppliers.

Late and wrongfully withheld payments to general contractors accrue interest at the rate quoted by at least 3 insured banks in Nevada, as the highest rate paid on CDs whose duration is approximately 90 days on the 1st day of the quarter.

Late and wrongfully withheld payments to subcontractors and suppliers accrue interest at 2% plus the lowest daily prime rate at the 3 largest banks on the date the contract was executed.

Nevada's prompt payment act does not apply to normal operation or maintenance contracts, contracts awarded in response to an emergency, or contracts awarded by the Nevada Department of Transportation.

If payment is going to be withheld, the withholding party must send a notice within 20 days after receipt of invoice, stating the amount withheld and a detailed explanation.

In Oregon, the rules around down payments for contractors are pretty straightforward. Progress payments are due within 30 days after the contractor receives a payment request.

If a payment request is disputed or defective, the contractor must be notified within 15 days of receipt. If the invoice is corrected and submitted within 7 days from receiving notice, payment must be made within the original 30-day timeframe.

For payments to the General Contractor, late or wrongfully withheld progress payments will accrue interest at the statutory rate. This interest rate is capped at 30% per year. For final payments, the interest rate is a whopping 1.5% per month.

Here's a breakdown of the payment timeline in Oregon:

There are some exceptions to Oregon's prompt payment law, including public contracts for emergency work, minor alterations, or ordinary repair/maintenance of public property.

In Pennsylvania, contractor down payment terms are governed by the state's prompt payment laws. Payment is due within 45 days after receipt of the payment application, and final payment is due within 45 days of final payment inspection.

Progress payments must be made within 45 days, and final payment inspection must occur within 30 days of the payment application. This ensures a timely flow of funds throughout the project.

Payment is due within 14 days to the Subcontractor after the General Contractor receives payment, and within 14 days to the Suppliers after the Subcontractor receives payment.

For late and wrongfully withheld payments, interest will accrue at the statutory rate plus an additional penalty of 1% per month. This emphasizes the importance of timely payment.

Pennsylvania's prompt payment provisions apply to all state and local construction contracts with a contract value of at least $50,000. These provisions do not apply to contracts with the Department of Transportation.

Here's a breakdown of the payment timeline in Pennsylvania:

In Rhode Island, payment terms are pretty straightforward. Payment is due within 30 days after receipt of payment request, which is considered received when goods or services are delivered or the request has been actually received, whichever is later.

For contractors, payment is due within 10 days to the subcontractor after receiving payments from the general contractor. This helps keep the cash flow going smoothly.

Suppliers, on the other hand, get paid within 90 days of furnishing materials. This gives them a bit more time to wait for payment, but it's still relatively quick.

If payments are late or withheld wrongfully, the interest rate is set at the prime rate, compounded monthly until payment is made. This is a good incentive for contractors and suppliers to get paid on time.

There are some exceptions to these payment terms, though. If the state controller determines reasonable cause to believe payment is not properly due, or if an inspection period or audit is required before payment, the payment date may be delayed.

Other reasons for delayed payment include insufficient balance in the fund from which payment is to be made, noncompliance with contract terms or conditions, or a required payment date modification pursuant to relevant law.

Here are some of the specific reasons for delayed payment in Rhode Island: