Originally posted 2022-03-23 10:54:51.

Recently, the Virginia General Assembly closed its session having passed legislation essentially banning “pay if paid” clauses in construction contracts, both public and private.  Assuming that Governor Youngkin signs the bill into law on or before his deadline of April 11, 2022, the following new requirement will be grafted into any Virginia construction contract:

Such contract shall require such higher-tier contractor to pay such lower-tier subcontractor within 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 to the lower-tier contractor for work performed by a subcontractor pursuant to the terms of the contract.

This is the main operative language (the 45-day payment requirement is also applied to project owners), but the legislation also imposes certain other notice duties upon both the owner and any higher-tier contractor on a construction project.  Interestingly, the legislation does not include a provision making it only effective for those contracts entered into after its effective date.  More on that later. Continue Reading