2.4 Georgia Prompt Pay Act & Right to Repair Act
Key Takeaways
- The Georgia Prompt Pay Act (O.C.G.A. § 13-11-1 et seq.) mandates that owners pay general contractors within 15 calendar days of receiving a proper pay request, and general contractors must pay subcontractors within 10 calendar days of receiving owner funds.
- Late payments under the Prompt Pay Act accrue statutory interest at the rate of 1% per month (12% per annum), and the prevailing party in an enforcement action is entitled to recover mandatory reasonable attorney's fees.
- To trigger statutory interest under the Prompt Pay Act, the contractor's invoice or pay application must contain the mandatory statutory disclosure notice.
- The Georgia Right to Repair Act (O.C.G.A. § 8-2-35 et seq.) requires residential property owners to serve a formal Notice of Claim on the contractor at least 90 calendar days prior to filing a defect lawsuit.
- Contractors have 30 calendar days after receiving a defect Notice of Claim to submit a written response offering inspection, repairs, monetary settlement, or disputing the claim; non-compliant lawsuits are automatically stayed by the court.
2.4 Georgia Prompt Pay Act & Right to Repair Act
Statutory Authorities:
- Georgia Prompt Pay Act: O.C.G.A. Title 13, Chapter 11 (§§ 13-11-1 through 13-11-11).
- Georgia Right to Repair Act: O.C.G.A. Title 8, Chapter 2, Article 2A (§§ 8-2-35 through 8-2-43).
Two critical statutory frameworks govern project cash flows and dispute resolution for Georgia licensed contractors: the Georgia Prompt Pay Act, which establishes strict payment deadlines and financial penalties across commercial and public construction projects, and the Georgia Right to Repair Act, which mandates a pre-litigation resolution framework for residential construction defect claims.
1. Georgia Prompt Pay Act (O.C.G.A. § 13-11-1 et seq.)
The Georgia Prompt Pay Act was enacted to prevent upstream parties (owners and prime contractors) from unjustly withholding earned construction funds and to maintain healthy liquidity across the construction pyramid.
Statutory Payment Timelines
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| GEORGIA PROMPT PAY ACT PAYMENT DEADLINES |
+------------------------------------+----------------------------------------------------+
| Payment Relationship | Statutory Deadline for Payment |
+------------------------------------+----------------------------------------------------+
| Owner to General Contractor | Within 15 CALENDAR DAYS of receiving proper invoice|
| General Contractor to Subcontractor| Within 10 CALENDAR DAYS of receiving payment from |
| (First-Tier) | Owner for that subcontractor's work |
| Subcontractor to Sub-Subcontractor | Within 10 CALENDAR DAYS of receiving payment from |
| or Material Supplier (Lower-Tiers) | the upstream contractor |
+------------------------------------+----------------------------------------------------+
- Owner to Contractor (15 Days): When a contractor performs in accordance with contract provisions and submits a timely, proper pay application, the owner must pay the contractor within 15 calendar days of receipt of the invoice (or within 15 days of architect/engineer approval if required by contract).
- Pass-Down Rule (10 Days): Once the general contractor receives payment from the owner, the GC must release payment to each subcontractor within 10 calendar days for the portion of work paid. This 10-day rule cascades down each subsequent tier (sub to sub-sub, sub-sub to supplier).
Interest Penalties & Attorney's Fees
- Statutory Interest Rate: Unpaid balances not paid within the statutory deadlines accrue interest at the rate of 1% per month (equal to 12% per annum simple interest), starting on the day immediately following the due date.
- Mandatory Prevailing Party Attorney's Fees: Under O.C.G.A. § 13-11-8, in any civil action to recover payments under the Prompt Pay Act, the prevailing party shall be awarded reasonable attorney's fees and litigation expenses.
Permissible Withholding Reasons (Bona Fide Disputes)
An upstream party may lawfully withhold payment (in whole or in part) without incurring statutory interest penalties only for specific legitimate reasons:
- Unsatisfactory job progress or defective construction not remedied;
- Disputed work or third-party claims filed;
- Failure of the subcontractor to make timely payments to lower-tier trades or laborers;
- Damage caused to the owner, general contractor, or another contractor; or
- Reasonable retainage withheld in accordance with contract terms.
Interest notice: O.C.G.A. § 13-11-7 conditions statutory interest on notifying the person being charged of that Code section when the payment request is made. The Act does not prescribe the invented blanket invoice sentence sometimes repeated in summaries.
Statutory Exemptions
The Prompt Pay Act does not apply to improvements intended for residential purposes consisting of 12 or fewer residential units. The parties can also agree to different payment periods, interest rates, and contract terms within the Act's provisions, so read the contract and the statutory exceptions.
2. Georgia Right to Repair Act (O.C.G.A. § 8-2-35 et seq.)
The Georgia Right to Repair Act applies to residential construction defect claims. Enacted to reduce burdensome construction litigation, the Act establishes a mandatory, step-by-step pre-litigation conciliation process that gives residential contractors an opportunity to inspect, repair, or settle alleged defects before a homeowner can file a lawsuit.
Covered Property & Scope
- Applies to single-family homes, townhouses, duplexes, condominiums, and substantial residential additions or remodeling projects.
- Applies to claims against licensed general contractors, residential contractors, and subcontractors for property damage or economic loss arising from defective construction, design, or surveying.
3. The Right to Repair Process & Deadlines
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| RIGHT TO REPAIR ACT STATUTORY STEP-BY-STEP |
+-----------------------------------------------------------------------------------------+
| STEP 1: Homeowner Notice of Claim |
| Served on contractor at least 90 CALENDAR DAYS before filing a lawsuit. |
| Must describe defects and provide supporting photos/expert reports. |
+-----------------------------------------------------------------------------------------+
| STEP 2: Contractor response within 30 days: request inspection, make an offer without inspection, settle, or state reasons for no remedy. |
+| STEP 3: If inspection is requested, the claimant provides access within 30 days; the contractor serves an offer or rejection within 14 days after completing inspection. |
+| STEP 4: The claimant serves acceptance within 30 days; a detailed rejection can permit a supplemental offer within 15 days. |
+-----------------------------------------------------------------------------------------+
Automatic Stay of Litigation (O.C.G.A. § 8-2-38)
If an eager homeowner or plaintiff's attorney files a defect lawsuit without first serving the 90-day Notice of Claim and completing the Right to Repair process:
- The trial court must automatically STAY (halt) the lawsuit upon motion by the contractor.
- The lawsuit remains frozen until the parties fully complete the statutory notice, inspection, and offer periods.
Tolling of the Statute of Limitations
Under O.C.G.A. § 8-2-42, serving a Notice of Claim tolls (pauses) the applicable statute of limitations (e.g., Georgia's 4-year statute of limitations for damage to realty under O.C.G.A. § 9-3-30 and the 8-year statute of repose under O.C.G.A. § 9-3-51) until the Right to Repair pre-litigation process is concluded.
Under the Georgia Prompt Pay Act (O.C.G.A. § 13-11-1 et seq.), within how many calendar days must a property owner pay a general contractor after receiving a proper, undisputed invoice?
What is the statutory interest penalty applied to late, undisputed construction payments under the Georgia Prompt Pay Act?
Under the Georgia Right to Repair Act (O.C.G.A. § 8-2-35 et seq.), at least how many days prior to filing a residential construction defect lawsuit must a homeowner serve a formal Notice of Claim on the contractor?