Chapter 1. Private Contractors and Subcontractors Prompt Payment.
§ 27A–101. Definitions.
For the purposes of this chapter, the term:
(1) "Contract" means:
(A) A construction contract that is an agreement of any kind of nature, express or implied, to provide labor or materials, or both, for demolition, building, renovation, alteration, or maintenance of buildings, roadways, and structures; or
(B) A food service contract that is an agreement of any kind of nature, express or implied, for doing work or furnishing materials, or both.
(2) "Contractor" means a person, entity, or business that has a contract with an owner.
(3) "Subcontractor" means:
(A) A person, entity, or business that has a contract with a contractor;
(B) A person, entity, or business that has a contract with a subcontractor; or
(C) A person, entity, or business that performs work on a construction site for a contractor or another subcontractor or that fabricates materials off-site, from plans and specifications unique to the project, for installation on the construction site.
(4) "Owner" means an owner of the property or a tenant; provided, that the tenant enters into contract with a contractor. The term "owner" does not include a District agency as that term is defined in § 2-221.01(3).
(5) "Undisputed amount" means an amount owed on a contract or a subcontract for which there is no good-faith dispute, including any retainage withheld.
§ 27A–102. Prompt payments to contractors.
(a) If a construction contract between an owner and contractor does not provide for specific dates and times of payment, the owner shall pay to the contractor undisputed amounts owed under the terms of the written contract within the earlier of:
(1) 15 days after the day on which the occupancy permit is granted;
(2) 15 days after the day on which the owner or the owner's agent takes possession; or
(3) 15 days after an owner receives a contractor's payment request.
(b) If a food service contract between an owner and contractor does not provide for specific dates and times of payment, the owner shall pay to the contractor undisputed amounts owed under the terms of the written contract within the earlier of:
(1) 15 days after the day on which the owner or the owner's agent takes possession; or
(2) 15 days after an owner receives a contractor's payment request.
(c) If a contract provides for specific dates or times of payment, the owner shall pay to the contractor undisputed amounts owed within 7 days after the date or time specified in the contract.
§ 27A–103. Failure to make prompt payments to a contractor.
If an owner fails to make prompt payments to a contractor as required by § 27A-102, the owner shall:
(1) Pay interest of 1.5% per month or any part of a month to the contractor on any undisputed amount not paid on time to the contractor; and
(2) If a contractor prevails in a civil action to collect interest penalties from an owner, the contractor shall be awarded its costs and disbursements, including reasonable attorney's fees, incurred in bringing the action.
§ 27A–104. Prompt payments to subcontractors.
(a) If a contract is between a contractor and subcontractor, or between subcontractors, the contractor or subcontractor shall pay undisputed amounts owed to its subcontractor within 7 days after receipt by the contractor or subcontractor of each payment received for its subcontractors' work or materials.
(b) Notwithstanding subsection (a) of this section, conditions of payment to the subcontractor on receipt by the contractor of payment from the owner may not abrogate or waive the right of the subcontractor to:
(1) Claim a mechanics' lien; or
(2) Sue on a contractor's bond.
(c) Any provision of a contract made in violation of subsection (b) of this section is void as against the public policy of the District.
(d)(1) A contractor or subcontractor shall not deduct or withhold a subcontractor's or lower-tiered subcontractor's payment for the purpose of offsetting any other contractual obligation or work to be completed.
(2) Any contract or subcontract provision in a contract executed after March 31, 2023, that allows a contracting party to withhold funds due under one contract or subcontract for alleged claims or damages due on another contract or subcontract is void as against public policy.
§ 27A–105. Failure to make prompt payments to a subcontractor.
(a) If a contractor fails to make prompt payments to a subcontractor, as required by § 27A-104, or a subcontractor fails to make prompt payments to another subcontractor, the contractor or subcontractor shall pay interest of 1.5% per month or any part of a month to the subcontractor on any undisputed amount not paid on time to the subcontractor.
(b) If the subcontractor prevails in a civil action to collect interest penalties from a contractor or another subcontractor, the subcontractor shall be awarded its costs and disbursements, including reasonable attorney's fees, incurred in bringing the civil action.
§ 27A–106. Applicability.
This chapter shall apply to all contracts entered into on or after October 1, 2013.
