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What's New?

• Waiving provisions: Unless specifically authorized by CASPA, parties to a contract or other agreement may not waive a provision of the act by contract or other agreement. This point was often debated and led to disputes, but the amendment makes it clear that the law is the law. It cannot be written around or out of contracts unless CASPA so authorizes. However, by definition, CASPA does not apply to improvements to residential projects that consist of six or fewer units that are under construction simultaneously or to contracts for the purchase of materials by a person performing work on his or her own property.

• Withholding payments: Owners must expressly provide backup for why they are withholding payments in the form of a written explanation of its “good faith reason” within 14 calendar days of receiving an invoice. Various contracts, depending on who drafted them, may include similar language already, but many parties do not necessarily pay much attention to it. Withheld payments are also not as simple as the act may portray them. An owner may not necessarily say, “I'm withholding payment because of X, Y and Z.” It's usually, “I'm only paying you this amount this month.” A written explanation of the reasons for withholding payment that previously may not have been part of the process will help to clear up these questions.

• Suspending work: Contractors and subcontractors can now suspend work if they have not received payment, though it will take more than a couple of months to do so. If no payment is made 30 calendar days after the due date – be it a deadline set by the contract or CASPA's statutory 20-day grace period – written notice can be sent to the owner or the owner's authorized agent. After another 30 days, if no payment has been made, the contractor can provide 10 calendar days' written notice of its intent to suspend work. Subcontractors can follow the same steps but will provide notice to contractors, not owners.

• Correcting errors: The provisions regarding payment when there is an error in an invoice have been clarified. If a party receives an incorrect or incomplete invoice, it has 10 working days to give written notice to the sender. Whether the invoice is corrected or not, the party who received it must pay the correct amount by the original due date.

• Regarding retainage: Payments subject to retainage, as always, must be paid within 30 days of final acceptance of work. But a contractor or subcontractor may now facilitate the release of retainage upon reaching a substantial completion of its own scope of work by posting a maintenance bond of 120 percent of the amount of retainage being held.

Moving Forward

Click here Joshua Lorenz is an attorney at Pittsburgh-based law firm Meyer, Unkovic & Scott. He focuses his practice on construction law and litigation. Joshua can be reached at [email protected]