When Does CASPA Apply in Pennsylvania?
The odds are extremely high that if you work in the construction industry you have had to deal with payment issues as some point in time. Whether you are a general contractor or a carpenter’s helper, at one point or another, a client refusing to pay has likely impacted your life. Historically, the law was noticeably slanted in favor of an owner when a dispute arose in a construction contract, effectively allowing a minor complaint about a small portion of the work on a project to hold up payment on the entire project. Fortunately for contractors and sub-contractors, the Pennsylvania Contractor and Sub-Contractor Payment Act, or CASPA, was introduced back in the mid-90s. CASPA essentially makes it easier for a contractor or sub-contractor to get paid by limiting the circumstances under which payment can be withheld on a construction project. If you work in the construction industry, one of the most important questions you likely have is “When does CASPA apply in Pennsylvania?”
The construction industry is one in which disputes are common. Those disputes have historically led to an owner withholding payment from the general contractor. That, in turn, leads to the general contractor withholding payment from the sub-contractors if the G.C. does not have the funds to cover the funds not yet received from the owner. This trickle-down effect can ultimately lead to employees not being paid on time. Historically, a dispute or complaint over something relatively minor on the project could cause this domino effect because all an owner had to do was dispute any aspect of the work in order to justify withholding payment in full. A mechanic’s line can be an option for a contractor who has not been paid; however, construction contracts often require the parties to waive the right to file a mechanic’s lien.
CASPA was passed by the Pennsylvania legislature back in 1994 and was intended to provide contractors and sub-contractors with an alternative to sitting around and waiting or filing a mechanic’s lien. CASPA does many things to encourage payment, including imposing a staggering 24 percent interest (one percent per month on past due balances plus another one percent in penalties) on overdue payments if the contractor must pursue the payment. Owners are also required to pay contractors for all items or work that are not in dispute under CASPA.
The Act applies to all construction contract and subcontracts within the Commonwealth, with the exception of small residential construction projects involving six or fewer residential units under construction simultaneously. In addition, there is an “owner’s” exclusion that means CASPA does not apply to contracts for the purchase of materials by a person performing work on his or her own real property.
If you have additional questions or concerns about the applicability of the Contractors and Sub-contractors Payment Act (CASPA) contact an experienced Conshohocken, Pennsylvania construction law attorney as soon as possible to discuss your options. Contact the construction law attorneys at Curley & Rothman, LLC by calling 610-834-8819 today to schedule your free consultation.