Thursday, July 12, 2012

The Massachusetts Prompt Pay Statute and Back Charges

I recently had the occasion to file my first lawsuit under the (relatively) new Prompt Pay Statute in Massachusetts.  The Prompt Pay Statute applies to construction projects of three million dollars or more.  There is a clause in the law that covers change orders.  It states that in order for a change order to be rejected, the owner or higher level contractor must state the contractual or factual basis for the rejection, and must certify that it is made in good faith.  The rejection also has to be made within a certain amount of time after submission of the change order depending on the level of the contractor (30 days for the owner plus 7 days for each level of subcontractor on down).  As part of this lawsuit, I alleged that back charges were issued late in violation of the contract, but I also stated that back charges are simply change orders after the fact, and for that reason,  the owner should have to state the contractual or factual basis for the back charges and certify that they are made in good faith.

What do you think?