{"id":899857,"date":"2022-04-20T11:15:43","date_gmt":"2022-04-20T17:15:43","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=899857"},"modified":"2022-04-20T11:15:45","modified_gmt":"2022-04-20T17:15:45","slug":"contingent-payment-provision-virginia","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/contingent-payment-provision-virginia\/","title":{"rendered":"New Legislation Bans Contingent Payment Provisions in Virginia"},"content":{"rendered":"\n<p>Jackson S. Nichols and Nocholas F. Morello | <a href=\"https:\/\/www.cohenseglias.com\/construction-law-now\/new-legislation-bans-contingent-payment-provisions-in-virginia\/#more-13529\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Construction Law Now Blog<\/a><\/p>\n\n\n\n<p>The Virginia Legislature passed a bill that, if signed into law by Governor Youngkin, would amend VA ST \u00a7\u00a7 2.2-4354 and 11-4.6 to prohibit the use of <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/can-contingent-payment-provision-affect-construction-lien-claim-washington\/\" target=\"_blank\" rel=\"noreferrer noopener\">contingent payment provisions<\/a> in public and private construction projects. It states that \u201c[p]ayment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor, regardless of that contractor receiving payment for amounts owed to that contractor.\u201d<\/p>\n\n\n\n<p>Virginia has a reputation for allowing parties to negotiate and agree to almost any terms in a contract. This deviation from that policy will remove a contractor\u2019s and higher-tiered subcontractor\u2019s ability to use \u201cpay-if-paid\u201d or \u201cpay-when-paid\u201d provisions to shift the risk of an owner\u2019s non-payment downstream to lower-tiered subcontractors. It is still uncertain whether or not this will apply only to projects moving forward or if it will also apply retroactively to projects that are in progress as of the law\u2019s effective date. On April 11, 2022, Governor Youngkin sent a proposed amendment to the bill back to the legislature proposing that the new bill \u201cshall apply to construction contracts executed on or after January 1, 2023.\u201d<\/p>\n\n\n\n<p>In addition to the ban on contingent payment provisions, the revision to VA ST \u00a7 2.2-4354 requires any public contract contain a provision that obligates a contractor to be individually liable for the entire amount owed to the subcontractor, except for \u201camounts otherwise reducible due to the subcontractor\u2019s noncompliance with the terms of the contract.\u201d If withholding funds for non-compliance, the contractor must provide the reason for withholding the funds in a written notice. The revision to VA ST \u00a7 11-4.6 addresses private contracts and states that in prime contracts, the owner shall pay the contractor within 45 days of an invoice of any undisputed portion of the work invoiced. Similarly, in a subcontract, the contractor must pay a subcontractor for undisputed portions of invoices \u201cwithin the earlier of (i) 45 days of the satisfactory completion of the portion of the work for which the subcontractor has invoiced or (ii) seven days after receipt of amounts paid by the owner to the general contractor or by the higher-tier contractor.\u201d<\/p>\n\n\n\n<p>If the bill is signed into law, the main takeaway for contractors and higher-tiered subcontractors is that it will be more important than ever to evaluate the financial condition and reliability of an owner on a project since, in the event of non-payment by the owner, contractors will now be liable for payment to lower-tiered subcontractors. Additionally, all contractors and subcontractors will need to review and revise their contracts to remove any contingent payment provisions.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jackson S. Nichols and Nocholas F. Morello | Construction Law Now Blog The Virginia Legislature passed a bill that, if signed into law by Governor Youngkin, would amend VA ST \u00a7\u00a7 2.2-4354 and 11-4.6 to prohibit the use of contingent payment provisions in public and private construction projects. It states that \u201c[p]ayment by the party&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/contingent-payment-provision-virginia\/\">Continue reading <span class=\"screen-reader-text\">New Legislation Bans Contingent Payment Provisions in Virginia<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[9895,10447,357],"class_list":["post-899857","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-advise-consult","tag-contingent-payment-provision","tag-virginia","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>New Legislation Bans Contingent Payment Provisions in Virginia - Advise &amp; 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