State Contractors Payment Terms Commonwealth of Mass Payment Terms and Regulations Explained

In Massachusetts, state contractors must comply with specific payment terms and regulations to avoid delays and penalties. The Commonwealth's payment terms are outlined in the Massachusetts General Laws, Chapter 30, Section 39M.

The state's payment terms require contractors to submit invoices within 30 days of completing a project. This allows the state to review and process payments in a timely manner.

Contractors who fail to submit invoices within the 30-day timeframe may face penalties, including interest on overdue payments. This can lead to significant financial losses if not addressed promptly.

To avoid these issues, contractors should carefully review the payment terms and regulations outlined in the Massachusetts General Laws and ensure they are in compliance.

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In Massachusetts, prompt payment laws regulate the acceptable amount of time in which payments must be made to contractors and subs. These laws ensure everyone on a construction project is paid in a timely fashion.

On private projects, property owners must make progress payments to Prime Contractors within 45 days after approval of invoice. The invoice must be approved or denied within 15 days. Prime Contractors must make payments to subcontractors within 45 days after approval of invoice.

On private projects, payments to material suppliers must be made within 45 days of invoice approval. The invoice must be approved or denied within 15 days, but may be extended an additional 7 days. If payment is late, the state's general interest statute presumably applies, with a 12% per year penalty.

On public projects, the public agency must make progress payments to the GC within 15 days of invoice. The deadline is extended to 30 days for payments from the Commonwealth. Final payment to prime contractors is due within 65 days of substantial completion of the project.

Payments to subcontractors on public projects are due immediately after receipt of payment from the public agency. Final payment is due within 65 days of substantial completion of the subcontractor's work. Retainage payments to subcontractors are due within 37 days from submission of invoice.

For suppliers in Massachusetts, progress payments are due immediately upon receipt of payment by their hiring party. Final payment is due within 65 days of the supplier's last day of furnishing. Retainage payment is due to suppliers within 37 days from invoice submission. If payment is late on a public project, the Prompt Pay laws set the interest penalty at the federal rate plus 3%.

Here's a summary of the payment requirements in Massachusetts:

Note that retainage requirements are discussed separately in the article.

Payment deadlines are crucial for contractors and property owners alike in Massachusetts. Private project payments from the prime contractor to the owner take 60 days from receipt of the pay request.

For private projects, the owner has 15 days to approve or deny a payment request, and then 45 days to make payment to the prime contractor. This is a total of 60 days.

Private project payments from the general contractor (GC) to subcontractors and suppliers also follow a similar formula, but with some extra time. The GC has 22 days to approve or deny invoices from subs and suppliers, and then 45 days to submit payment.

Payments from subcontractors to their own subcontractors or suppliers must be approved within 29 days, and then released within 45 days. This chain of payments continues down the line.

Progress payments to the prime contractor on a public project are due within 15 days after receipt of a proper request for payment. However, if the project is contracted by a commonwealth entity, the time is extended to 30 days.

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Final payments to the prime contractor on a public project must be made within 65 days of substantial completion. Once the prime contractor receives a progress payment, they must pay their subcontractors and suppliers immediately.

For public projects, final payments to subcontractors must also be made within 65 days of substantial completion of that subcontractor's work.

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Late payment penalties can be a significant concern for contractors in Massachusetts.

Any payments that are late or wrongfully withheld on a public construction project will incur interest penalties on the unpaid balance.

Interest will begin to accrue on the first day payment is past due.

The interest rate is equal to the discount rate charged by the Federal Reserve, plus 3% per year.

There's no provision for attorney fees in Massachusetts.

On private projects in Massachusetts, property owners must make progress payments to prime contractors within 45 days after approval of invoice. The invoice must be approved or denied within 15 days. This timeframe can be extended an additional 7 days.

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Prime contractors on private projects are required to make payments to subcontractors within 45 days after approval of invoice. The invoice must be approved or denied within 15 days. This ensures timely payment to those working on the project.

Massachusetts Prompt Pay laws also apply to material suppliers, requiring payments within 45 days of invoice approval. The invoice must be approved or denied within 15 days, with an additional 7-day extension possible. This helps maintain a smooth cash flow for all parties involved.

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Private construction projects in Massachusetts are regulated by Mass. Gen. Laws. 149 § 29E.

These rules apply to all private projects with an original contract price of $3 million or more.

One notable exception is that MA prompt payment rules don't apply to residential projects of 4 or fewer.

Section 29E of Massachusetts laws and regulations applies to private construction projects with an original contract price of $3 million or more.

One notable exception is residential projects with 4 or fewer units, which are exempt from the prompt payment rules.

Property owners in Massachusetts must make progress payments to Prime Contractors within 45 days after approval of invoice.

Prime Contractors on private projects in Massachusetts must make payments to subcontractors within 45 days after approval of invoice.

Massachusetts Retainage Requirements are in place to protect both contractors and owners on construction projects.

On private projects valued at $3M or more, no more than 5% retainage may be withheld.

Once a project has reached substantial completion, the prime contractor may submit an invoice for retainage, which must be paid within 30 days of receipt of the invoice.

In Massachusetts, contractors and owners do not need to hold retainage funds in a separate escrow account.

Retainage cannot exceed 5%. The public entity may hold 1% retainage after substantial completion pending final completion of the entire work.

Release (minus the estimated cost to complete or correct unfinished/ unsatisfactory work) is required within 65 days of substantial completion.

A certificate from the architect that work is complete is required for retainage release.

Here's a summary of Massachusetts' retainage limits and deadlines for private projects:

On public projects in Massachusetts, the amount of retainage that can be withheld is also capped at 5% of each progress payment. The public entity must release retainage to the prime contractor within 65 days of full/substantial completion of the project, or occupancy of the improvement by the public entity; whichever is earlier.