Are you a subcontractor, contractor, or project owner that is caught up in a payment dispute in connection with work performed or materials supplied for a construction project in Nebraska? If so, then there is a good possibility that the Nebraska Construction Prompt Payment Act applies and impacts the rights of the parties involved. In general, the Nebraska Construction Prompt Payment Act applies to numerous public and private construction contracts and subcontracts in Nebraska, and it shapes the rights of subcontractors, contractors, and project owners when a dispute arises.
Payment Requirements
The Act mandates that when a contractor has performed work in accordance with the provisions of a contract for an owner, the owner must pay the contractor within thirty (30) days after the owner has received a payment request made pursuant to the contract. The timeline for payment of a subcontractor is triggered when the contractor receives payment from the owner. In this regard, when a subcontractor has performed work in accordance with its subcontract, and all conditions to payment have been satisfied, the contractor must pay the subcontractor within ten (10) days after the contractor receives a periodic or final payment from the owner.
Impacts on Retainage
The Act also impacts retainage that can be held on projects by limiting the amount of retainage allowed and providing a clear timeline for the release of project retainage. Specifically, an owner, contractor, or subcontractor may only withhold retainage of either 10 percent or the amount stated in the applicable agreement, whichever is lower. In addition, so long as the contractor or subcontractor provides satisfactory and reasonable assurances of continued performance and financial responsibility to complete the work and if the work is at least 50 percent complete, no more than 5 percent of additional progress payment can be withheld as retainage.
The Act also governs when retainage must be released on a project. Under the Act, the owner must release and pay all retainage for work completed in accordance with the contract within 45 days after the project, or a designated portion thereof, is substantially complete.
