Getting Paid: Maryland's Prompt Payment Act

The Maryland Prompt Payment Act requires timely payment to contractors performing work and furnishing materials, even in situations where the contract does not specify the payment schedule. The timing of payment depends on whether the work performed by the contractor was for an owner or for another contractor. If the contract does not provide specific dates or times for payment, payment of any undisputed amount owed under the terms of the contract must be made within 30 days after the day on which the occupancy permit is granted or 30 days after the day on which the owner or the owner’s agent takes possession, whichever is earlier. If the contract provides for specific dates or times for payment, the contractor must be paid any undisputed amount within 7 days after the date or time specified in the contract. In situations where the contract is not with an owner, but with another contractor, any undisputed amount owed to the subcontractor must be paid within 7 days after the contractor receives payment for the subcontractor’s work or materials. The Maryland Prompt Payment Act, however, does not apply to any contracts with public entities, including the State of Maryland, a county, a municipal corporation, a board of education, or a public authority or instrumentality. In addition to obtaining the undisputed payments, other remedies to contractors under the Maryland Prompt Payment Act include interest from the date the court determines that the amount owed was due and, in the event of a showing of bad faith by the non-paying party, attorney’s fees.

If you have any additional questions regarding the Maryland Prompt Payment Act, please contact Michael W. Siri at siri@bowie-jensen.com.