Louisiana Prompt Payment Guide and FAQs

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Louisiana Prompt Payment Overview

Louisiana Prompt Payment Requirements


NO
DAYS
Prime Contractors

Louisiana law does not specify a deadline for payments from property owners to prime contractors.


14
DAYS
Subcontractors

Payment to subcontractors in Louisiana is due within 14 days after payment is received by their hiring party.


14
DAYS
Suppliers

Payment to material suppliers in Louisiana is due within 14 days after payment is received by their hiring party.


0.5%
/ DAY
Interest & Fees

On private projects in Louisiana, late payments are subject to a penalty imposed at 0.5% per day, up to a maximum of 15% of payment due. Attorneys' fees may be awarded for collection of amount due. All fees for defense can be awarded to the nonpaying party if the claim was made "without merit."

45
DAYS
Prime Contractors

For Prime Contractors on public projects in Louisiana, progress payments are due according to the contract. Final payment (including retainage) is due 45 days from receipt of "clear lien certificate." For highway projects, progress payments are due 30 days after invoice, and final/retainage payment is due 45 days from substantial completion of the project.


14
DAYS
Subcontractors

For subcontractors, payment is due within 14 days after payment is received from above.


14
DAYS
Suppliers

For suppliers, payment is due within 14 days after payment is received from above.


0.5%
/ DAY
Interest & Fees

A late payment penalty is imposed at 0.5% per day (but not more than 15% of payment due). Attorneys' fees may be awarded to the prevailing party.

Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.

Projects Covered by Prompt Payment in Louisiana

The state of Louisiana regulates payment on both private and public construction projects within the state.

Private Projects

La. Rev. Stat. §9:2784 regulates payment on all private construction projects, with the exception of residential projects. Payment on residential projects will be governed by the terms of the construction agreement between the parties.

Payment Deadlines for Private Projects

Louisiana law does not regulate payments between private property owners and prime contractors. Those deadlines and penalties will be governed by the contract. However, once the prime contractor has received any type of payment from the property owner, the prime has 14 consecutive days to make payment to their subcontractors and suppliers. The same 14-day timeline also applies to payments made to sub-subcontractors and suppliers on the following tier.

Penalties for Late Payment on Private Projects

If any payment is late or otherwise wrongfully withheld, the unpaid balance will accrue an interest penalty at a rate of 0.5% per day. However the total amount of interest penalties can’t exceed 15% of the payment due. If the dispute goes to court or arbitration, the subcontractor or supplier may be awarded attorney fees. If however, the claim for non-payment is deeded without merit, the court will award the costs of defense to the non-paying party.

Public Projects

Public projects in Louisiana are also governed by La. Rev. Stat. §9:2784. In addition, two additional laws apply:

Payment Deadlines for Public Projects

Once a prime contractor has submitted a certified request for payment in accordance with the terms of the contract, the public entity must make payment within 45 days of receipt. As for final payments to the prime contractor, the payment deadline is also 45 days, but counted from the formal, final acceptance of the project.

As for payments to first and second tier subcontractors and suppliers, these all must be made within 14 consecutive days after the contractor or sub received payment.

Penalties for Late Payment on Public Projects

All late or wrongfully withheld payments will be penalized in the same manner as private projects. Interest will accrue at 0.5% a day, which is capped at 15% of the unpaid balance. However, unlike private projects, attorney fees will be awarded to any prevailing party in a claim brought under Louisiana’s prompt payment laws.

Federal projects

Federal construction projects that take place in Louisiana are not subject to the state’s prompt payment laws. Instead, the US Federal Prompt Payment Act applies.

Louisiana Prompt Payment Frequently Asked Questions

Louisiana Prompt Payment Private Projects FAQs

How do I qualify for Prompt Payment penalties or remedies in Louisiana?

If the prompt payment provisions apply, there is no specific requirement to qualify other than completion of the work that is to be paid. Attorneys fees may be recovered in civil court for the collection of past due payment.

On public projects, the prime contractor must provide a “clear lien certificate” to the public entity. Interest will begin to accrue 45 days after the public entity’s receipt of a clear lien certificate, with no further action required by the contractor.

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Can I include prompt payment fees in mechanics lien or bond claim?

Mechanics liens: No. Louisiana mechanics lien rules don’t allow miscellaneous amounts to be included on the face of a lien claim.

Bond claims: No. Louisiana law does not allow miscellaneous amounts in a bond claim.

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How do I collect late payment interest or other penalties?

Louisiana law sets forth a penalty for late payments amounting to 0.5% of the amount due per day payment is late, which automatically begins accruing after the payment deadline.

In order to collect the interest penalty, the unpaid party will need to file a claim under the prompt payment statute.

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Louisiana Prompt Payment Law
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Can I demand prompt payment penalties without filing a lawsuit?

Sending a notice of intent to lien and/or a prompt payment demand letter is generally the best method for encouraging parties to make payment.

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Louisiana Prompt Payment Law
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Are there reasons for which payment may be withheld past the general deadline?

Louisiana does not specifically identify reasons for which payment may be withheld, so it is likely that the contract between the parties will govern the particular reasons on a case-by-case basis. It may be helpful to send a form requesting reasons why the payment was withheld. This form can provide evidence in the event that a claim is required.

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Louisiana Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of Louisiana’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. Louisiana’s specific laws can be found in: La. Rev. Stat. §§ 9:2784, 38:2191, and 48:251.5 , and are reproduced below.

Prompt Payment Statute on Private Projects

§ 9:2784. Late payment by contractors to subcontractors and suppliers; penalties

A. When a contractor receives any payment from the owner for improvements to an immovable after the issuance of a certificate of payment by the architect or engineer, or when a contractor receives any payment from the owner for improvements to an immovable when no architect or engineer is on the job, the contractor shall promptly pay such monies received to each subcontractor and supplier in proportion to the percentage of work completed prior to the issuance of the certificate of payment by such subcontractor and supplier, or by the owner if no architect or engineer is on the job.  Further, whenever a subcontractor receives payment from the contractor, the subcontractor shall promptly pay such monies received to each sub-subcontractor and supplier in proportion to the work completed.

B. If for any reason the contractor receives less than the full payment from the owner, then the contractor shall be obligated to disperse only the funds received on a prorated basis with the contractor, subcontractors, and suppliers each receiving a prorated portion based on the amount due on the payment.

C. If the contractor or subcontractor without reasonable cause fails to make any payment to his subcontractors and suppliers within fourteen consecutive days of the receipt of payment from the owner for improvements to an immovable, the contractor or subcontractor shall pay to the subcontractors and suppliers, in addition to the payment, a penalty in the amount of one-half of one percent of the amount due, per day, from the expiration of the period allowed herein for payment after the receipt of payment from the owner.  The total penalty shall not exceed fifteen percent of the outstanding balance due.  In addition, the contractor or subcontractor shall be liable for reasonable attorney fees for the collection of the payments due the subcontractors and suppliers.  However, any claim which the court finds to be without merit shall subject the claimant to all reasonable costs and attorney fees for the defense against such claim.

D. The provisions of this Section shall not be applicable to improvements to an immovable that is used for residential purposes.

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Prompt Payment Statute on Public Projects

§ 9:2784. Late payment by contractors to subcontractors and suppliers; penalties

A. When a contractor receives any payment from the owner for improvements to an immovable after the issuance of a certificate of payment by the architect or engineer, or when a contractor receives any payment from the owner for improvements to an immovable when no architect or engineer is on the job, the contractor shall promptly pay such monies received to each subcontractor and supplier in proportion to the percentage of work completed prior to the issuance of the certificate of payment by such subcontractor and supplier, or by the owner if no architect or engineer is on the job.  Further, whenever a subcontractor receives payment from the contractor, the subcontractor shall promptly pay such monies received to each sub-subcontractor and supplier in proportion to the work completed.

B. If for any reason the contractor receives less than the full payment from the owner, then the contractor shall be obligated to disperse only the funds received on a prorated basis with the contractor, subcontractors, and suppliers each receiving a prorated portion based on the amount due on the payment.

C. If the contractor or subcontractor without reasonable cause fails to make any payment to his subcontractors and suppliers within fourteen consecutive days of the receipt of payment from the owner for improvements to an immovable, the contractor or subcontractor shall pay to the subcontractors and suppliers, in addition to the payment, a penalty in the amount of one-half of one percent of the amount due, per day, from the expiration of the period allowed herein for payment after the receipt of payment from the owner.  The total penalty shall not exceed fifteen percent of the outstanding balance due.  In addition, the contractor or subcontractor shall be liable for reasonable attorney fees for the collection of the payments due the subcontractors and suppliers.  However, any claim which the court finds to be without merit shall subject the claimant to all reasonable costs and attorney fees for the defense against such claim.

D. The provisions of this Section shall not be applicable to improvements to an immovable that is used for residential purposes.

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Louisiana Prompt Payment Law
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Louisiana Prompt Payment Law
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§ 38:2191. Payments under contract

A. All public entities shall promptly pay all obligations arising under public contracts when the obligations become due and payable under the contract.  All progressive stage payments and final payments shall be paid when they respectively become due and payable under the contract.

B. Any public entity failing to make any progressive stage payment within forty-five days following receipt of a certified request for payment by the public entity without reasonable cause shall be liable for reasonable attorney fees. Any public entity failing to make any final payments after formal final acceptance and within forty-five days following receipt of a clear lien certificate by the public entity shall be liable for reasonable attorney fees.

C. The provisions of this Section shall not be subject to waiver by contract.

D. Any public entity failing to make any progressive stage payments arbitrarily or without reasonable cause, or any final payment when due as provided in this Section, shall be subject to mandamus to compel the payment of the sums due under the contract up to the amount of the appropriation made for the award and execution of the contract, including any authorized change orders.

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Louisiana Prompt Payment Law
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Louisiana Prompt Payment Law
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Prompt Payment Statute on Public Projects (Dept. of Transportation)

§ 48:251.5. Payments under contract

A. The department shall promptly pay all obligations arising under public contracts within thirty days of the date the obligations become due and payable under the contract. All progressive stage payments and final payments shall be paid when they, respectively, become due and payable under the contract.

B.

(1) If the department fails to make any final payments after recordation of formal final acceptance and within forty-five days following receipt of a clear lien certificate by the department, the retainage or other payments known by the department to be due and payable shall be released, but the contractor and the contractor’s surety shall remain liable for any overpayment by the department to the contractor, stipulated damages for delay in a completion or work necessary to repair latent defects, or in performance of warranty work under the contract.

(2) If the department fails to make any final payment within one hundred days after its receipt of the clear lien certificate, the department shall be liable for legal interest on the balance due on the contract.

(3) If the department fails to make final payment as provided or neglects to promptly ascertain the final estimated quantities under the contract in bad faith, then the contractor shall be entitled to attorney fees if a mandamus to perform such acts is necessary for the contractor to receive all monies due and owed the contractor under the contract.

C. The provisions of this Section shall not be subject to waiver by contract.

Summary
Louisiana Prompt Payment Law
Article Name
Louisiana Prompt Payment Law
Description
Summary of Louisiana Prompt Payment requirements and laws for Louisiana construction projects including free forms, FAQs, resources and more.
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