Under Georgia's Prompt Pay Act (O.C.G.A. § 13-11-1 et seq.), an owner must pay a contractor within 15 days of receiving a payment request, and a contractor must pass payment to subcontractors and suppliers within 10 days of receiving it. Late payments can earn 1% interest per month, but only if proper notice was given.
Slow pay is a fact of life in construction, but in Georgia it is not supposed to be a business model. The Georgia Prompt Pay Act, O.C.G.A. § 13-11-1 through § 13-11-11, sets default deadlines for payments moving down the contracting chain, from the owner to the general contractor, and from the general contractor to subcontractors and suppliers. It also limits why payment can be withheld, controls how retainage is held and released, and adds interest and attorney's fees to the cost of paying late.
The Act is a useful tool, but it has conditions and exceptions that catch contractors off guard. Interest is only owed if you gave the right notice. Your contract can change the default rules. Small residential projects are excluded entirely. Jerry Parisi works with contractors, subcontractors and suppliers across Jefferson, Jackson County and Northeast Georgia to build these rules into their contracts and pay applications, and to enforce them when a project stops paying.
Who the Prompt Pay Act covers
The Act protects contractors and subcontractors, and it defines "subcontractor" to include materialmen as defined in O.C.G.A. § 44-14-360. That means suppliers who furnish materials to a project generally get the same payment-timing protections as the trades installing them.
The "owner" can be a private person or business, and it also includes state, local and municipal government agencies. The Act does not apply when the owner is a county with a population under 10,000 or a city with a population under 2,500.
- General contractors who contract directly with the owner
- Subcontractors at every tier, who are owed pass-through payment from the party above them
- Material suppliers, who count as subcontractors under the Act
- Commercial, industrial and larger multifamily projects (residential projects of 13 or more units)
Payment deadlines (15 and 10 days) and allowed withholding
When a contractor has performed under its contract, O.C.G.A. § 13-11-4(a) requires the owner to pay within 15 days of the owner or its representative receiving a payment request for work completed or services provided.
Payment then has to keep moving. Under § 13-11-4(b), the contractor must pay each subcontractor, and each subcontractor must pay its own subcontractors, the full amount received for that party's work and materials within 10 days of receiving each periodic or final payment. "Receipt" means the funds are actually in the contractor's or subcontractor's bank account. The 10-day duty applies when the sub has performed, has met its subcontract's conditions for payment, and has given reasonable assurances of continued performance and financial responsibility (such as a payment and performance bond) if the contractor reasonably asks for them.
The Act does not force anyone to pay for bad work. Section 13-11-5 lists the reasons an owner can withhold from a contractor, or a contractor from a sub. If you are being shorted, the first question is whether the stated reason actually fits this list:
- Unsatisfactory job progress
- Defective construction that has not been fixed
- Disputed work
- Third-party claims filed, or reasonable evidence that one will be filed
- Failure to make timely payments for labor, equipment and materials
- Damage caused by the contractor or subcontractor
- Reasonable evidence that the contract cannot be completed for the unpaid balance
1% per month interest, and the notice you must give
Under O.C.G.A. § 13-11-7(a), a party that pays late owes interest at 1% per month (or a pro rata fraction of that) on the unpaid balance, starting the day after the due date.
There is a catch that costs contractors real money. No interest is due unless the party being charged was notified of § 13-11-7 at the time the payment request was made. The simplest fix is to put a short statement on every pay application and invoice citing the section. Also know that accepting a progress payment or final payment releases all claims for interest on that payment, so raise interest before or when you take the check, not afterward.
Contracting around the Act, and the willful-breach catch
Most of the Act's terms are defaults, not mandates. Section 13-11-7(b) lets owners, contractors and subcontractors agree by contract to different interest rates, payment periods and other terms, and those contract terms control. A general contractor can, for example, write longer payment windows into its subcontracts.
The limit is willful breach. If a party willfully breaches the contract's own payment-timing terms, the statutory 1% monthly interest rate applies anyway. Separately, many subcontracts include pay-if-paid or pay-when-paid clauses. Georgia courts enforce a pay-if-paid condition when the subcontract expresses it clearly, so read your payment clause closely before you sign.
Retainage on private projects
The Prompt Pay Act does not set a fixed percentage cap on retainage for private work. Under § 13-11-5(a), the owner may hold a reasonable amount, but no more than the retainage percentage in the owner-contractor contract. Under § 13-11-5(b), a contractor cannot hold more retainage from a sub than the owner is holding from the contractor on that sub's work.
Release has its own deadline. Section 13-11-6 requires the contractor, within 10 days of receiving retainage from the owner, to pass it through to subcontractors and reduce each sub's retainage the same way the owner reduced the contractor's. That applies once the sub's completed work equals 50% of its subcontract value (including approved change orders), the work is proceeding satisfactorily, and the sub gives any reasonable assurances requested.
Public projects are different. Georgia caps public-works retainage at 5% of each progress payment for contracts entered into on or after July 1, 2022 (O.C.G.A. § 13-10-80). See our page on public project bond claims for how payment works on government jobs.
Attorney's fees, other remedies and the residential exclusion
In any action to enforce a claim under the Act, O.C.G.A. § 13-11-8 lets the prevailing party recover a reasonable attorney's fee, including at trial, on appeal and in arbitration. That cuts both ways: it can make a strong claim worth pursuing, and it can make a weak one expensive. The Act's interest and fee remedies are not exclusive, and it does not take away remedies you have under your contract or other statutes (§ 13-11-9).
The Act does not reach every job. Under § 13-11-10, it does not apply to improvements to residential property with 12 or fewer residential units. Single-family homes, remodels and small multifamily projects fall outside it, so payment terms on those jobs depend on your contract and other Georgia law.
No right to stop work, and how the Act fits with liens
Nothing in the Prompt Pay Act gives you a right to suspend work or walk off a job for nonpayment. Any right to stop work has to come from your contract. Stopping without one can put you in breach, so build a clear suspension clause, with a notice period, into your contracts before you need it.
The Act also works alongside, not instead of, Georgia's lien and bond laws. Interest and fees under the Act do not replace lien rights on a private project or payment-bond rights on a public one, and lien deadlines keep running while you wait on a late payment. Georgia law also voids any waiver of lien or payment-bond rights signed before you furnish labor or materials. If a job is slipping, protect your lien or bond rights on their own timeline.
How Parisi Law Firm helps
- Drafting and reviewing prime contracts and subcontracts, including payment, retainage, interest and suspension clauses
- Adding the § 13-11-7 interest notice to your pay applications and invoices
- Demand letters citing the Act's deadlines, interest and fee provisions
- Pursuing or defending payment claims in court or arbitration
- Coordinating Prompt Pay claims with lien, bond and breach-of-contract remedies
Georgia Prompt Pay Act: key rules at a glance
| Rule | What the Act says | Code section |
|---|---|---|
| Owner pays contractor | Within 15 days of receiving a payment request | O.C.G.A. § 13-11-4(a) |
| Contractor pays subs and suppliers | Within 10 days of receiving payment (funds in the bank) | O.C.G.A. § 13-11-4(b), § 13-11-2(7) |
| Late-payment interest | 1% per month from the day after the due date, only if the payor was notified of § 13-11-7 with the payment request | O.C.G.A. § 13-11-7(a) |
| Contracting around the Act | Allowed; contract terms control, but a willful breach of payment timing brings back the 1% rate | O.C.G.A. § 13-11-7(b) |
| Private retainage | No fixed cap; limited to the prime contract percentage, and a sub's retainage can't exceed what the owner holds on that sub's work | O.C.G.A. § 13-11-5 |
| Retainage pass-through | Within 10 days of the contractor receiving retainage, once the sub's work is 50% complete and proceeding satisfactorily | O.C.G.A. § 13-11-6 |
| Attorney's fees | Prevailing party recovers a reasonable fee, including trial, appeal and arbitration | O.C.G.A. § 13-11-8 |
| Residential exclusion | Does not apply to residential projects of 12 or fewer units | O.C.G.A. § 13-11-10 |
Frequently Asked Questions
How fast does an owner have to pay a contractor in Georgia?
Under the Georgia Prompt Pay Act, an owner must pay a contractor within 15 days of receiving a payment request for work performed under the contract (O.C.G.A. § 13-11-4(a)). The contractor then has 10 days after the funds reach its bank account to pay subcontractors and suppliers. A written contract can set different payment periods.
What interest can I charge on a late construction payment in Georgia?
The Prompt Pay Act allows interest of 1% per month on the unpaid balance, starting the day after payment was due (O.C.G.A. § 13-11-7). But interest is owed only if the paying party was notified of that section when you requested payment, and accepting the payment releases the interest claim. Put the notice on every pay application.
Does the Prompt Pay Act apply to home projects?
Not to most of them. The Act does not apply to improvements to residential property with 12 or fewer residential units (O.C.G.A. § 13-11-10), so single-family homes and remodels are outside it. Residential projects of 13 or more units are covered. On smaller residential jobs, your contract terms and Georgia's lien laws do the heavy lifting.
Can my contract override the Prompt Pay Act?
Largely, yes. O.C.G.A. § 13-11-7(b) lets the parties agree to their own interest rates, payment periods and other terms, and those contract terms control. The exception is a willful breach of the contract's payment-timing terms, in which case the Act's 1% monthly interest rate applies anyway. Have payment clauses reviewed before you sign.
How much retainage can be held on a private project in Georgia?
The Prompt Pay Act sets no fixed percentage cap on private work. The owner can hold a reasonable amount up to the percentage in the prime contract, and a contractor can't hold more from a sub than the owner holds on that sub's work (O.C.G.A. § 13-11-5). Public projects are different: a 5% maximum applies under O.C.G.A. § 13-10-80.
Can I stop work if I'm not paid?
Not under the Prompt Pay Act. The Act gives no statutory right to suspend work for nonpayment, so any right to stop has to come from your contract. Walking off without one can put you in breach and hand the other side a claim. A clear suspension clause with a notice period protects you before a payment problem starts.
Can I recover attorney's fees in a Prompt Pay Act claim?
Yes, if you win. O.C.G.A. § 13-11-8 gives the prevailing party in an action to enforce the Act a reasonable attorney's fee, including at trial, on appeal and in arbitration. Because the losing side can end up paying, it is worth having a lawyer assess the strength of a claim or defense before it is filed.