When an owner or general contractor refuses to pay for completed work, the disputes that follow quickly become complex, time consuming, and expensive. But two Arizona laws have created streamlined procedures so that contractors, subcontractors, and material suppliers can obtain payment for comparatively little effort and cost.
First, contractors and suppliers who bill according to Arizona’s Prompt Pay Act, A.R.S. §§ 32-1129 et seq., have their pay applications automatically “deemed approved and certified” unless the owner sends a detailed, written objection. If payment is not made within seven days, the balance begins accruing interest at 1.5% per month (18% per year). In addition, if a lawsuit or arbitration is required, the prevailing party will be entitled to its reasonable attorney fees.
Second, contractors and suppliers who follow Arizona’s Mechanic’s and Materialman’s Lien statutes, A.R.S. §§ 33-981 et seq., can secure payment for their work by obtaining an interest in and foreclosing on the property where the project is located if the owner fails to pay. Like the Prompt Pay Act, a party who must resort to a lawsuit to foreclose a valid lien may be able to recover its reasonable attorney fees.
Both statutes offer tremendous protection to contractors and suppliers, but each has specific requirements that must be met in order to take full advantage. This may require changes in how a contractor or supplier bills and will add a few extra steps at the beginning of a project. That said, the minimal trouble on the front end will be well worth it if a lawsuit becomes necessary.
Mesch Clark Rothschild has an experienced team of attorneys well-versed in Arizona’s Prompt Pay Act and Mechanic’s Lien statutes that assist owners, contractors, and suppliers. We are also seasoned mediators and arbiters. Call our law office in Tucson at (520) 624-8886.
