Colorado Construction Payment Reform Act of 2009
In an attempt to shorten the time owners have to pay contractors and subcontractors, the Colorado Legislature introduced Colorado Senate Bill 09-095 (the “Construction Payment Reform Act of 2009” (“Act”)). While the Act is designed to protect contractors and subcontractors, it will require that everyone in the construction and development industry – including lenders and owners – adapt.
I. THE ACT
A. Who and
what will be impacted?
As currently drafted, the Act applies to all
private construction contracts worth more than $100,000, except contracts for
the construction of “single-family or multi-family dwellings with no more than
two units.” It also exempts construction contracts that take less than one month
to complete, single payment and unit-price contracts, and contracts payable in
installments or upon completion.
B. How the Act
works?
The Act requires that all contractors and subcontractors be paid
within thirty days after the end of each “billing cycle”, which is a cycle
agreed upon by the contractor and owner under the general contract.
Surprisingly, however, the term “billing cycle” is not currently defined by the
Act. Instead, the Act provides flexibility for the general contractor and owner
to negotiate appropriate billing cycles on a project by project basis.
Payment terms that conflict with the Act are “unenforceable and void.”
Posted by FC Admin at 12:58 PM
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Categories: Colorado | Construction