Continuing with our theme of Ready for 2015, this blog serves as a reminder of your rights and obligations under Nebraska’s Prompt Pay Act, Neb. Rev. Stat. §§ 45-1201-1211.
As you may recall, Nebraska’s legislature amended the Prompt Pay Act in 2014. The most significant changes are highlighted below.
Attorney’s Fees May be Recovered. The most significant change in the Prompt Pay Act allows contractors to recover damages if they pursue a claim under the Act. And, this is not reciprocal in that the defendant may not recover fees.
Limit on Retainage. Retainage may not exceed 10%. And, when the work is 50% complete, no more than 5% of future progress payments may be held as retainage.
Release of Retainage. Owners are now required to release retainage within 45 days after the project is substantially complete. Upstream contractors must pay subcontractors within 10 days of receiving retainage payment from the owner.
Interest. Contractors can demand interest on late payments at the rate of 1% per month. Interest begins to accrue on the date the payment is due. But, interest is only recoverable if the entity charged interest, ie the owner or upstream contractor, has been notified of the provisions of the Prompt Pay Act.
Application. The Act does not apply to residential construction.
Take Away: Nebraska’s updated Prompt Pay Act greatly improves your opportunity to collect amounts owed on construction projects.