What payment deadlines does Oregon impose on private construction contracts, and can the contract change them?
Under ORS 701.620 to 701.640, an owner must make progress payments to the original contractor where the work is expected to take 60 or more days to complete, and may do so by mutual agreement on a shorter job (701.625(1)); except as 701.625(3) provides, those progress payments are due no later than 14 days after the date the billing is received and final payment of all remaining amounts no later than seven days after the date the owner approves the work (701.625(3)(a)); the owner may pay later only if the drawings and specifications expressly state in a clear and conspicuous manner that an extended payment period is allowed, identify it as a specific number of days, and carry on each page a statement substantially similar to the statutory Notice of Extended Payment Provision (701.625(3)(b)). Payment is not required at all unless the owner receives a billing or estimate for the work or materials in accordance with the contract, and a billing is deemed certified 10 days after receipt unless the owner issues a written statement detailing the items not approved (701.625(4)-(5)). An owner who does not pay timely owes the original contractor interest at one and one-half percent a month, or a higher agreed rate (701.625(11)). If a subcontractor or material supplier has performed and the original contractor receives payment from the owner for that work or those materials, the original contractor must pay within seven days after receiving the payment (701.630(2)(a)); a progress or final payment delayed more than seven days bears interest from the eighth day at one and one-half percent a month or a higher agreed rate, except during periods when payment is withheld under 701.630(4) or (5) (701.630(6)). In any action, claim or arbitration brought to collect interest under either section, the prevailing party is awarded costs and reasonable attorney fees (701.625(14), 701.630(7)). The right those sections protect is set out in ORS 701.635(1): an original contractor may suspend performance, or terminate after a suspension of more than one month, if the owner fails to make timely payment of the amount certified under 701.625, on at least seven days' written notice unless the contract prescribes a shorter period, without being in breach, and a construction contract may not extend that notice period. A construction contract may not include a provision stating that a party cannot suspend performance or terminate if another party fails to make prompt payments under 701.620 to 701.640, and such a provision is void and unenforceable (701.640).
The trap
An owner's longer payment term takes effect only with the clear and conspicuous statement and the per-page notice in the drawings and specifications (701.625(3)(b)). A clause barring suspension or termination for nonpayment under these sections is void (701.640), and a contract cannot lengthen the seven-day notice an original contractor must give before suspending (701.635(1)). The owner and the original contractor may agree in writing to change the payment and certification day counts, but a subcontractor or material supplier that does not consent in writing stays on the period shown in the drawings and specifications, and no contract change may alter a subcontractor's or supplier's right to prompt and timely progress payments under 701.630 (701.625(8)). On a job expected to take less than 60 days there is no statutory progress-payment duty at all unless the parties agree to one (701.625(1)). These sections do not apply to buildings subject to the Low-Rise Residential Dwelling Code, public contracts, or the affordable housing described in 701.645.
16 authorities
- statuteORS 701.625enactment date not established
The words that state the rule
If a construction contract is for construction work that is expected to take 60 or more days to complete, an owner shall make progress payments to the original contractor. By mutual agreement with an original contractor, an owner may make progress payments to the original contractor under a construction contract for which the construction work is expected to take less than 60 days to complete.
- statuteORS 701.625enactment date not established
The words that state the rule
Except as provided in this subsection, the owner shall: (A) Make progress payments no later than 14 days after the date the billing is received; and (B) Make final payment of all remaining amounts no later than seven days after the date that the owner approves the work.
- statuteORS 701.625enactment date not established
The words that state the rule
An owner may make progress payments or final payment later than the time allowed under paragraph (a) of this subsection if: (A) The owner provides drawings and specifications that expressly state in a clear and conspicuous manner that an extended payment period is allowed and identify the extended payment period as a specific number of days after the date that the billing or estimate is received or the date that the owner approves all work; and (B) The owner provides on each page of drawings and specifications a statement substantially similar to the following:
- statuteORS 701.625enactment date not established
The words that state the rule
Notice of Extended Payment Provision The construction contract will allow the owner to make: (1) Progress payments no later than _____ days after the date a billing or estimate is received. (2) Final payment of all remaining amounts no later than _____ days after the date the owner approves all work.
- statuteORS 701.625enactment date not established
The words that state the rule
Payment is not required under this section unless the owner receives from the original contractor a billing or estimate for the work performed or the materials or products supplied in accordance with the terms of the construction contract. (5) The owner is deemed to have received the billing or estimate when the billing or estimate is received by any person designated by the owner for the receipt, review or approval of the billing or estimate. A billing or estimate is deemed to be certified 10 days after the owner receives the billing or estimate, unless before that time the owner or the owner’s agent prepares and issues a written statement detailing those items in the billing or estimate that are not approved.
- statuteORS 701.625enactment date not established
The words that state the rule
After a subcontractor or material supplier submits a bid or proposal or other written pricing information to an original contractor, an owner and the original contractor may agree in writing to change the specified number of days after certification during which the owner may make payment to the original contractor or within which the owner must certify a billing or estimate. The billings by any subcontractor or material supplier that does not provide written consent to the change remain subject to the certification period indicated in the drawings and specifications. A construction contract may not be changed in a manner that alters the right of any subcontractor or material supplier to receive prompt and timely progress payments as provided under ORS 701.630.
- statuteORS 701.625enactment date not established
The words that state the rule
If an owner or a person designated by the owner as responsible for making progress payments on a construction contract does not make a timely payment under this section, the owner shall pay the original contractor interest on the unpaid balance at the rate of one and one-half percent a month or fraction of a month, or at a higher rate as the parties to the construction contract may agree.
- statuteORS 701.625enactment date not established
The words that state the rule
In any action, claim or arbitration brought to collect interest pursuant to this section, the prevailing party shall be awarded costs and reasonable attorney fees.
- statuteORS 701.630enactment date not established
The words that state the rule
If a subcontractor has performed in accordance with a construction contract, and the original contractor receives payment from the owner for work performed by the subcontractor, the original contractor shall pay the subcontractor for that work no later than seven days after the original contractor receives the payment.
- statuteORS 701.630enactment date not established
The words that state the rule
If a material supplier has performed in accordance with a construction contract, and the original contractor receives payment from the owner for materials or products provided by the material supplier, the original contractor shall pay the material supplier for those materials and products no later than seven days after the original contractor receives the payment.
- statuteORS 701.630enactment date not established
The words that state the rule
If a progress or final payment to a subcontractor or material supplier is delayed by more than seven days after receipt of a progress or final payment by an original contractor or subcontractor, the original contractor or subcontractor shall pay its subcontractor or material supplier interest beginning on the eighth day, except during periods of time during which payment is withheld pursuant to subsection (4) or (5) of this section, at the rate of one and one-half percent a month or a fraction of a month on the unpaid balance or at such higher rate as the parties agree.
- statuteORS 701.640enactment date not established
The words that state the rule
A construction contract may not include any provision, covenant or clause that: (a) Makes the construction contract subject to the laws of another state or that requires any litigation, arbitration or other dispute resolution proceeding arising from the construction contract to be conducted in another state; or (b) States that a party to the construction contract cannot suspend performance under the construction contract or terminate the construction contract if another party to the construction contract fails to make prompt payments under the construction contract pursuant to ORS 701.620 to 701.640. (2) Any provision, covenant or clause described in subsection (1) of this section is void and unenforceable.
- statuteORS 701.630enactment date not established
The words that state the rule
In any action, claim or arbitration brought to collect interest under this section, the prevailing party shall be awarded costs and reasonable attorney fees.
- statuteORS 701.645enactment date not established
The words that state the rule
ORS 701.620 to 701.640 do not apply to: (1) A contract for the construction, alteration, repair, maintenance, moving or demolition of a building that is subject to the Low-Rise Residential Dwelling Code; (2) A public contract under ORS 279.835 to 279.855 or ORS chapter 279A, 279B or 279C; or (3) Housing in which all or part of the dwelling units are reserved for rental to persons having an income equal to or less than 80 percent of the median household income for the area as determined by the Housing and Community Services Department.
- statuteORS 701.630enactment date not established
The words that state the rule
An original subcontractor that receives payment under this subsection for work provided to the original subcontractor by another subcontractor, or for materials or products provided to the original subcontractor, shall pay the other subcontractor or material supplier for the work, materials or products no later than seven days after the original subcontractor receives the payment.
- statuteORS 701.635enactment date not established
The words that state the rule
An original contractor may suspend performance under a construction contract, or if performance is suspended for longer than one month may terminate a construction contract, if the owner fails to make timely payment of the amount certified under ORS 701.625. An original contractor shall provide written notice to an owner at least seven days before the original contractor suspends performance or terminates the construction contract, unless a shorter notice period is prescribed in the construction contract. An original contractor may not be deemed in breach of a construction contract for suspending performance or terminating a construction contract pursuant to this subsection. A construction contract may not extend the notice period under this subsection.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.