Texas Prompt Payment Act

What is the Texas Prompt Payment Act?

The Texas Prompt Payment Act is Texas law in Chapter 28 of the Texas Property Code. It sets when owners and contractors must pay for approved work on many private commercial construction projects, and adds interest penalties when payments are late.

If you sub on commercial jobs in Texas or wait on owner draws from a GC, this Act is the backbone of "you cannot sit on my money forever" rules on private work.

Public projects funded with public money follow different statutes (including Chapter 2253 of the Texas Government Code). This entry focuses on the private commercial rules in Chapter 28.

Who the Act applies to

Chapter 28 generally covers private commercial construction contracts when an owner, general contractor, or subcontractor owes payment for:

• Work properly performed under the contract
• Materials delivered and used on the project
• Other contractually approved charges

Pure residential home remodeling may follow different payment and lien rules. Confirm which statute applies before you cite Chapter 28 in a demand letter.

Payment deadlines (overview)

The Act creates a chain of payment timing on private commercial jobs:

Contracts can sometimes extend deadlines within limits set by the statute. Read your subcontract before assuming "net 60" is enforceable.

Interest and withheld payments

When payment is wrongfully withheld past the deadline, the Act may require:

• Interest on the unpaid amount at 1.5% per month (18% per year) unless the contract sets a lower lawful rate
• Recovery of reasonable attorney's fees in some enforcement actions

That interest adds up fast on a six-figure commercial draw that is 90 days late.

"Proper" invoices and disputes

You only get prompt-payment protection when your payment request is proper under the contract and statute. That usually means:

• Work was performed or materials supplied as required
• The invoice matches contract billing procedures
• You submitted required lien waivers, insurance certs, or schedule updates if the contract demands them

If the owner or GC has a good-faith dispute about defective work or incomplete scope, withholding may be allowed within limits. Document your side with daily reports, photos, and change orders.

Prompt payment vs mechanic's lien

The Prompt Payment Act and Texas mechanic's liens solve different problems:

You may use both strategies in the same dispute, but each has its own rules. Talk to counsel before choosing a path.

Relationship to lien waivers

GCs often require lien waivers before releasing a draw. Texas payment fights sometimes turn on whether the waiver was conditional or unconditional, and whether the check cleared.

Use conditional waivers tied to actual payment when possible. Track which waiver matches which invoice.

Practical tips for Texas contractors

Bill on schedule. Late or vague invoices delay the statutory clock.

Read the pay-if-paid and pay-when-paid language. Texas courts treat some clauses differently than subs expect.

Send formal demand when a draw is late. A written demand referencing Chapter 28 gets attention in commercial disputes.

Separate residential and commercial playbooks. Payment law on a Dallas office build-out is not the same as a kitchen remodel in Austin.

Disclaimer

This glossary entry is general information only, not legal advice. Deadlines, exceptions, and contract interactions under Chapter 28 depend on your agreement and project type. Consult a Texas construction attorney before sending legal demands or filing suit.