On October 23, 2019, the Ohio House of Representatives introduced a bill (H.B. No. 380) that would amend Ohio’s Prompt Pay Act (ORC Section 4113.61) to provide general contractors with payment protection similar to that currently enjoyed by subcontractors under the Act.
Yesterday, the legislature approved an amendment to the Bill that clarifies that the Bill affects only private projects (payment terms on public projects would be unaffected). The amendment also reduces the originally proposed 35-day payment term to 30 days.
As we reported last autumn, under the proposed Bill, owners would be permitted to withhold amounts only for retention or for disputed liens or claims relating to the work. The bill does not appear to permit the parties contractually to lengthen the payment term, and failure to make timely payment would require an owner to pay interest at 18% per annum. The bill also expressly permits (but does not require) owners to reduce retainage by agreement in the contract.
We will be monitoring the bill’s progress closely and will keep our clients informed of its progress.