On October 23, 2019, the Ohio House of Representatives introduced a bill (H.B. No. 380) that would amend Ohio’s Prompt Pay Act (ORC Section 4113.61) to provide general contractors with payment protection similar to that currently enjoyed by subcontractors under the Act. Specifically, the proposal would require project owners to pay contractors within 35 days of receiving the contractor’s invoice. Owners would be permitted to withhold amounts only for retention or for disputed liens or claims relating to the work. The bill does not appear to permit the parties contractually to lengthen the 35-day payment term, and failure to make payment by day 35 would require an owner to pay interest at 18% per annum. The bill also expressly permits (but does not require) owners to reduce retainage by agreement in the contract.
The proposed modifications would be beneficial for contractors and provide greater certainty of payment. For owners, it will require prompt analysis and approval of pay applications. If lenders are involved, then those requirements will need to be satisfied and funded within the 35-day timeframe.
We will be monitoring the bill’s progress closely.