Texas Prompt Payment Act
Two parallel Texas statutes mandating timely payment on construction projects: Tex. Prop. Code Ch. 28 (private projects) and Tex. Gov't Code Ch. 2251 (public projects). On private projects, owner must pay prime within 35 days of invoice; prime must pay subs within 7 days of receiving owner payment. Late payments accrue 1.5%/month interest, with attorney's fees recoverable in litigation.
The Texas Prompt Payment Act is two parallel statutes mandating timely payment on construction projects: Tex. Prop. Code Ch. 28 for private projects and Tex. Gov't Code Ch. 2251 for public projects. On private projects, the owner must pay the prime contractor within 35 days of receiving a proper payment request; the prime contractor must pay subcontractors within 7 days of receiving payment from the owner; and the same 7-day downstream rule applies at each lower tier. Late payments accrue interest at 1.5% per month, with attorney's fees recoverable in litigation.
Private project payment timing
Under § 28.002, the owner must pay the prime contractor within 35 days of receiving a written payment request for properly performed work or suitably stored or specially fabricated materials. The prime contractor then has 7 days from receipt of owner payment to pay subcontractors, materialmen, and suppliers their proportionate share. Each lower tier in the contract chain has 7 days from receipt of upper-tier payment to pay its own downstream parties. The chain operates as a series of cascading 7-day deadlines triggered by actual receipt, not by the original invoice date.
Public project payment timing
Under Tex. Gov't Code § 2251.021, governmental entities must pay vendors within 30 days of receiving a proper invoice. Prime contractors on public projects must pay subcontractors within 10 days of receiving payment from the governmental entity. The longer downstream window on public projects (10 vs. 7 days on private projects) reflects the greater administrative complexity of public-project payment processing.
Interest, attorney's fees, and right to suspend
Late payment under either Act accrues interest at 1.5% per month (Property Code § 28.004; Government Code § 2251.025). In litigation to recover an unpaid amount, the court may award reasonable attorney's fees and costs to the prevailing party (§ 28.005; § 2251.043). On private projects, an unpaid contractor or subcontractor has the statutory right to suspend performance after 10 days' written notice if payment is not made (§ 28.007), a powerful remedy that effectively shifts owner-payment risk to a stop-work threat. The public-project act does not include an analogous suspension right.
Good-faith dispute exception
An owner or upper-tier contractor may withhold payment for a "good-faith dispute", defined in § 28.001 for private projects to mean a dispute over whether the work was performed in a proper manner. An owner withholding payment under this exception may withhold up to 110% of the disputed amount under § 28.006. The "good faith" requirement is fact-intensive and frequently litigated; pretextual withholding to obtain commercial leverage does not qualify and exposes the withholding party to interest, attorney's fees, and (on private projects) the contractor's right to suspend performance.
Anti-waiver
Section 28.009 makes the private-project Prompt Payment Act non-waivable, a contractual provision purporting to waive its protections is void. The single exception is for residential single-family construction, where contracts may extend the owner's payment window beyond 35 days (with the same 1.5%/month interest still applicable). The non-waiver rule means standard subcontract pay-when-paid clauses cannot extend the 7-day downstream payment requirement once funds are received.
For Texas contractors, subcontractors, and suppliers, the Prompt Payment Act is a powerful collection tool, interest, attorney's fees, and stop-work rights make late payment substantially more expensive than timely payment. Best practice: (1) calendar payment-request and payment-receipt dates with 7-day and 35-day downstream tracking; (2) document delivery of payment requests via certified mail or other proof-of-receipt method; (3) deliver written demand for late payment promptly with statutory citation; (4) on private projects, deliver 10-day suspension notice if payment remains overdue. For owners and upper-tier contractors, calendaring payment deadlines and avoiding pretextual "good-faith dispute" withholding is the most cost-effective compliance posture.