The Arizona Prompt Pay Act and Owner-Occupied Dwellings

The Arizona Prompt Pay Act provides numerous benefits and protections for contractors.  The benefits include a right to timely payment, 1.5% interest per month on unpaid invoices, and the right to stop work for non-payment (after notice).  However, the Act only applies to Owner-Occupied Dwellings if the contractor includes certain language on the front page of all its estimates and invoices.  The statutory language is as follows:

Notice to owner of applicability of Arizona prompt pay act

(Notice required by Arizona Revised Statutes section 32-1129.07)

Attention: Your obligations to pay your contractor are subject to the Arizona prompt pay act. That act is set forth in section 32-1129, Arizona Revised Statutes, and sections 32-1129.01 through 32-1129.07, Arizona Revised Statutes. The full text of the statutes are available at your local public law library or the internet. Under that act, you have the right to withhold all or a portion of a payment to a contractor for a variety of reasons, including defective construction work that has not been corrected. However, in order to do so, you must issue a written statement setting forth in reasonable detail your reasons for withholding payments within fourteen (14) days after the date you receive a billing or estimate. If you fail to issue the written statement within that period, the billing or estimate will be deemed approved. Once the billing or estimate is deemed approved, you must pay the billing or estimate within seven (7) days. Generally, you are limited by the act to withholding only an amount that is sufficient to pay the direct costs and expenses you reasonably expect to incur to protect you from loss for which the contractor is responsible. You are encouraged to read the act in full to know your obligations and rights.

For assistance in creating bids, invoices, contracts, change orders and other construction project documents, contact us at 520-792-0448 or eric@durazzo-eckel.com.  We provide legal services to contractors throughout Tucson and Southern Arizona.

Written by

Eric Hawkins received his B.A. from the University of Arizona, and his J.D. from the University of Arizona College of Law. Eric has been with the firm since his admission to the bar in 2006, and became a partner in 2011. Eric practices primarily in the areas of Construction law, Employment law, and Business law. This work includes contract preparation and review, partnership agreements, construction collection claims, Registrar of Contractors matters and disputes both in and out of the courtroom. Over the past five years Eric has successfully litigated several cases involving business fraud, construction defects, and employment disputes. Eric has worked with the Alliance of Construction Trades in Tucson, and represents subcontractors and suppliers in the organization. Eric has written numerous articles on various issues including indemnification, construction contracts, insurance law and employment practices.