The Florida Local Government Prompt Payment Act was created to ensure the prompt payment to contractors who enter into an agreement with local governmental entities for construction services, which is inclusive of all labor, services, and materials provided that are associated with the construction of any improvement or demolition of real property. One of the main benefits of the Local Government Prompt Payment Act is that if a portion of the invoice is disputed, the remainder of the payment invoice is considered undisputed and must be paid by the due date or the entity may accrue late payment interest charges. It is recommended that when filing a prompt payment invoice that you have an experienced Tampa construction lawyer working on your behalf.
Payment and Rejection Procedures
According to Florida Statutes 218.735, the local governmental entity must include in the contract the identity of the representative to which the contractor should submit invoices or should supply a separate notice with this information within ten business days of the contract award or notice to proceed.
When a contractor submits an invoice, the representative must stamp the invoice as received, at which point the time period for payment or rejection of payment begins. The due date for an invoice that is submitted by a contractor is determined by the following factors:
1. If the invoice must be approved by an entity representative before it is submitted to the entity for payment, then the payment is due 25 business days after the date on which the invoice is stamped as received.
2. If the invoice does not require approval by an entity representative, payment is due 20 days after the date on which the invoice is stamped as received.
If payment is not received by the due date, the contractor is permitted to send an overdue notice to the entity. After four business days of the delivery of the overdue notice, if the invoice is not rejected, the invoices will be considered undisputed, with the exception of any amounts that are fraudulent or misleading. If the invoice does not meet contract requirements, the entity must provide the contractor with a written rejection specifying the deficiency and action needed to rectify within 20 business days of receipt. Once the invoice is corrected, payment or notice of rejection of the invoice is due within ten business days of receipt or the first business day after the entity’s next held meeting.
Payment to Subcontractors, Sub-Subcontractors & Suppliers
When payment is received by a contractor for labor, services or materials furnished by subcontractors and suppliers, payment is due to those subcontractors and suppliers within ten days of receipt of payment. If a subcontractor utilizes the services of sub-subcontractors and suppliers, payment to those sub-subcontractors and suppliers is due within seven days of receipt of payment by the subcontractor. Under F.S. 218.735(6), contractors and subcontractors are entitled to dispute invoices so long as the payment rejection is in writing and the actions required to rectify the dispute are included in the rejection. However, any amounts that are undisputed, are required to be paid within the outlined time limits.
The Tampa construction lawyers at Cotney Construction Law understand the importance of receiving and delivering prompt payment. To ensure that your rights under the Local Government Prompt Payment Act are properly protected, we strongly advise contractors and subcontractors to seek legal counsel.
Payment Dispute Procedures
Per F.S. 718.735, any disputes that arise between a contractor and a local governmental entity that cannot be resolved through a correction of the invoice as described above, should be resolved in accordance with any dispute resolution procedures outlined within the construction contract or other applicable ordinances. If no dispute resolution procedures are outlined within the contract, the dispute must be resolved with the procedures set forth in F.S. 218.76(2).
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.