Sponsored by Fullerton & Knowles, P.C.

In 2022, the Virginia General Assembly and Governor passed SB550 which would eliminate or prohibit “pay if paid” clauses in public and private construction contracts in Virginia. Payment by the owner can no longer be a condition precedent to payment to any lower-tier subcontractor, unless the owner is “insolvent or a debtor in bankruptcy.” SB550 will be effective on January 1, 2023.

The new § 11-4.6 (B) also mandates “prompt pay” provisions in private construction contracts that (i) requires the owner to pay the general contractor within 60 days of receipt of an invoice after “satisfactory completion” and (ii) requires a “higher-tier contractor” to pay a “lower-tier subcontractor" within 60 days of satisfactory completion of the work or within seven days after receipt of payment from the owner, whichever is earlier.

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