Bill > HB451

This bill establishes new prompt payment requirements for private and state construction contracts, aimed at ensuring timely compensation for contractors and subcontractors. The legislation requires private construction contracts to include provisions mandating that owners pay contractors within 60 days of receiving an invoice for satisfactorily completed work. If an owner withholds payment, they must provide written notification to the contractor within 60 days, specifying the reason for withholding. Similarly, contracts between contractors and subcontractors must include payment provisions requiring contractors to pay subcontractors either within 60 days of invoice receipt or within 7 days of receiving payment from the owner. If a contractor withholds payment, they must provide written explanation to the subcontractor. The bill stipulates that if payments are not made as required, interest shall accrue at 9% annually starting from the 60th day after invoice receipt. Importantly, these requirements do not prohibit retainage provisions in contracts and do not mandate payment for work that is non-compliant with contract terms. The new regulations will take effect on October 1, 2025, and apply to both private and state construction contracts, aiming to improve payment practices and financial transparency in the construction industry.

Business and Industry

https://mgaleg.maryland.gov/mgawebsite/Legislation/Details/HB0451?ys=2025RS