Georgia Prompt Payment Act for Construction

Georgia's Prompt Payment Act establishes mandatory payment timelines and interest penalties for construction contracts involving both public and private projects within the state. Codified under O.C.G.A. § 13-11-1 through § 13-11-11, the law governs the timing of payments from owners to contractors and from contractors to subcontractors and suppliers. Understanding these statutory deadlines is essential for contractors, subcontractors, and project owners to avoid automatic interest liability and payment disputes on Georgia construction projects.

Definition and scope

The Georgia Prompt Payment Act (O.C.G.A. § 13-11-1 et seq.) applies to construction contracts for both private and public projects in Georgia. The statute defines covered contracts broadly, including agreements for the construction, alteration, or repair of any building, structure, or improvement to real property within the state.

Coverage includes:
- Contracts between property owners and prime contractors (private projects)
- Contracts between prime contractors and subcontractors
- Contracts between subcontractors and sub-subcontractors or suppliers
- Public construction contracts administered by state agencies and local governments

Not covered / scope limitations:

The Act does not apply to single-family residential construction contracts where the owner occupies or intends to occupy the property as a primary residence. Contracts governed solely by federal law — such as those under direct federal agency authority — fall outside this statute's reach. The Act also does not supersede or replace contractual provisions that explicitly set different payment terms where the statute permits such modification. Adjacent areas such as Georgia mechanics lien law and Georgia construction payment bond claims provide separate remedies that may operate alongside Prompt Payment Act protections but are governed by distinct statutory frameworks.

How it works

The Act operates through a tiered timeline of payment obligations, running from owner to contractor to subcontractor. Each tier carries specific deadlines measured from defined triggering events — typically the submission of a pay application or invoice.

Payment timeline structure:

1. Owner to Prime Contractor (Private Projects): The owner must pay an undisputed amount within 15 days of the date payment is due under the contract, or within 15 days of receipt of a pay application if the contract is silent on due dates (O.C.G.A. § 13-11-2).
2. Prime Contractor to Subcontractor: Once the prime contractor receives payment from the owner, the prime must pay each subcontractor their proportionate share within 10 days of receipt of funds.
3. Subcontractor to Sub-subcontractor or Supplier: The same 10-day downstream obligation applies at each successive tier after payment is received.
4. Dispute notification: A party wishing to withhold payment must provide written notice specifying the basis for the dispute within the applicable payment window.
5. Interest accrual: Unjustified late payments accrue interest at 1% per month (12% annually) on the unpaid balance under (O.C.G.A. § 13-11-5).
6. Attorney's fees: A court may award reasonable attorney's fees to the prevailing party in a Prompt Payment Act dispute.

The pay-when-paid versus pay-if-paid contract clause distinction is critical here. Georgia courts have recognized enforceable pay-if-paid clauses that can shift the timing risk to subcontractors — a contrast to the Act's default waterfall structure. Parties should examine their contract language in relation to the Act's provisions. For broader contract law context, see Georgia construction contract law.

Common scenarios

Scenario 1 — Owner withholds without notice: An owner receives a completed pay application from the prime contractor and allows the 15-day window to pass without payment or written dispute notification. Under the Act, interest at 1% per month begins accruing on the unpaid amount from the date payment was due.

Scenario 2 — Prime receives payment but delays downstream: A prime contractor is paid in full by the owner but holds subcontractor funds beyond the 10-day disbursement window. The subcontractor has a direct statutory claim for the overdue amount plus interest. This scenario frequently intersects with Georgia construction retainage rules, since retainage amounts are subject to their own release timelines.

Scenario 3 — Disputed work items: If an owner legitimately disputes the quality or completion of 20% of the work billed, the owner may withhold that proportionate amount after providing timely written notice, while remaining obligated to release the undisputed 80% within the statutory window.

Scenario 4 — Public project payment chains: On state-funded or local government contracts, the Prompt Payment Act coordinates with the Georgia construction payment bond claims framework. Subcontractors on public projects cannot file a mechanics lien against public property but can pursue bond claims — and the Prompt Payment Act's interest provisions apply independently to the payment chain.

Decision boundaries

The Act draws sharp distinctions between permissible withholding and unjustified delay:

Contractors navigating Georgia public construction procurement should note that public entity payment obligations may also be shaped by appropriation cycles and agency-specific contracting rules, though the Act's interest penalties remain applicable. Similarly, projects subject to bonding requirements under Georgia construction bonding requirements involve overlapping protections that interact with but do not displace Prompt Payment Act rights.

References

• O.C.G.A. § 13-11-1 through § 13-11-11 — Georgia Prompt Payment Act (Justia)
• O.C.G.A. § 13-11-2 — Payment obligations, private contracts (Justia)
• O.C.G.A. § 13-11-5 — Interest on late payments (Justia)
• Georgia General Assembly — Official Code of Georgia Annotated
• Georgia Department of Administrative Services — Construction Contracting