Construction Payment Contract Template for United States

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Key Requirements PROMPT example:

Construction Payment Contract

"I need a Construction Payment Contract for a large commercial building project in Texas with a total value of $5.2M, including monthly progress payments and 10% retainage, starting March 2025 with specific provisions for subcontractor payments."

Document background

The Construction Payment Contract serves as a crucial document in the U.S. construction industry, protecting the interests of both contractors and property owners. This contract type is essential when establishing clear payment terms, schedules, and conditions for construction work, ensuring compliance with federal regulations and state-specific requirements. It includes provisions for progress payments, retainage, change orders, and lien waivers, while addressing potential payment disputes and establishing clear procedures for payment applications and certifications. The document is particularly important for projects where significant financial transactions occur over extended periods.

Suggested Sections

1. Parties: Identification of the contractor and client/owner, including legal names and addresses

2. Background: Brief description of the construction project and purpose of the payment agreement

3. Definitions: Key terms used throughout the contract including 'Work', 'Contract Sum', 'Progress Payment', etc.

4. Contract Sum: Total amount payable under the contract and payment breakdown structure

5. Payment Schedule: Timing and conditions for progress payments, including payment application process

6. Retainage: Terms for withholding and release of retainage amounts

7. Change Orders: Process for requesting and approving changes to work and corresponding payment adjustments

8. Default and Remedies: Consequences of payment default and available remedies

Optional Sections

1. Performance Bond: Terms of performance bond requirements and conditions for larger projects or when required by law

2. Payment Bond: Terms of payment bond requirements and conditions for public projects or when required by law

3. Joint Check Agreement: Terms for paying subcontractors directly when there are concerns about subcontractor payment

4. Escrow Agreement: Terms for handling funds in escrow for large projects or when required by client

Suggested Schedules

1. Schedule of Values: Detailed breakdown of contract sum by work elements

2. Payment Application Form: Standard form for submitting payment requests

3. Lien Waiver Forms: Standard forms for partial and final lien waivers

4. Project Schedule: Timeline of work linked to payment milestones

5. Subcontractor List: List of approved subcontractors and their payment terms

6. Insurance Certificates: Proof of required insurance coverage

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Commercial Construction
Residential Construction
Industrial Construction
Infrastructure
Institutional

Relevant Teams

Finance
Legal
Operations
Procurement
Project Management

Relevant Roles

Construction Project Manager
Contract Administrator
Chief Financial Officer
Construction Manager
Procurement Manager

Industries

Miller Act: Federal law requiring performance and payment bonds for federal construction projects to protect subcontractors and suppliers

Fair Labor Standards Act (FLSA): Federal law establishing minimum wage, overtime pay, and child labor standards affecting construction workers

Davis-Bacon Act: Federal law requiring payment of prevailing wages on federally funded construction projects

Contract Disputes Act: Federal law governing resolution of disputes in federal construction contracts

Prompt Payment Act: Federal law ensuring timely payment to contractors and subcontractors on federal projects

State Mechanic's Lien Laws: State-specific laws providing security interest for contractors, subcontractors, and suppliers to ensure payment for work performed

State Prompt Payment Acts: State-specific laws establishing payment timeframes and penalties for late payments in construction projects

State Contractor Licensing Requirements: State-specific regulations governing contractor qualifications and licensing

State Construction Trust Fund Statutes: State laws requiring certain construction funds to be held in trust for subcontractors and suppliers

Little Miller Acts: State-specific versions of the federal Miller Act for state public construction projects

Building Codes: Local regulations governing construction standards and safety requirements

Permitting Requirements: Local regulations for obtaining necessary construction permits and approvals

Uniform Commercial Code (UCC): Standardized state laws governing commercial transactions, including construction materials and equipment

Insurance Requirements: Legal obligations for maintaining appropriate insurance coverage during construction projects

Bonding Requirements: Legal requirements for performance and payment bonds to guarantee project completion and payment

Workers' Compensation Laws: State-specific laws requiring insurance coverage for worker injuries and accidents

AIA Standards: American Institute of Architects standardized construction contract documents and practices

ConsensusDocs Standards: Industry-standard construction contract documents developed by a coalition of construction organizations

Payment Terms Requirements: Legal requirements for structuring payment schedules, methods, and conditions in construction contracts

Retainage Regulations: State laws governing the withholding of a percentage of payment until project completion

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General Contractor And Subcontractor Agreement

U.S.-governed agreement between general contractor and subcontractor defining work scope, terms, and obligations in construction projects.

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Let's create your Construction Payment Contract

Authors

Alex Denne

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