The New Jersey Prompt Payment Act requires that an owner pay its contractor within 30 days of full performance of the construction contract and approval of the billing.
Similarly, a subcontractor must be paid by the general contractor for work completed and approved by the owner or the general contractor within 10 calendar days of receipt of payment or retainage funds according to the Act.
If payment is not timely made, then the delinquent party is liable for the amount of money owed under the contract plus interest at the rate equal to the prime rate plus 1%.
In addition, the party which is owed the money may upon seven days written notice, stop work until it is paid.
The Act also provides that the prevailing party may recover reasonable attorney fees. This issue was explored by the Appellate Division in a recent construction lawsuit filed by an unpaid contractor. The court held that the amount of attorneys fees to be recovered did not need to be proportional to the amount owed by the owner or contractor, and upheld an award of attorneys fees which was three times the amount of damages.
This is a boon to contractors and subcontractors who typically are put on indefinite hold for payment. Now the owner or contractor owing the payment has a big financial incentive to make timely payment: a possible award of substantial attorneys fees.
This office has specialized in collection work for over 30 years. Call us today!