Contractor Prompt Payment Act... Can you really contract around it?
We haven't seen as much discussion as would seem to be merited by the provisions of the Illinois Contractor Prompt Payment Act (815 ILCS 603/1 et seq.). This act has written itself into every construction contract in the State of Illinois (excepting public works, single family homes and buildings with fewer than 12 family units, of course). This lack of constructive commenting is likely because the Act didn't become law until August 31, 2007. However, from the comments and criticisms we have seen, there's an extremely important and sure to be contested issue that needs to be addressed: Is it possible to "opt" out of the provisions of the Act?
The original version of the House Bill (HB 0743) that introduced what later became the Act included language at the beginning of Section 10 which read:
- "Construction contracts. All construction contracts shall be deemed to provide the following unless they expressly exclude the provisions of this Act"
This provision was the sole subject of Senate Committee Amendment No. 1, which was adopted by the Senate and the House and incorporated into the Act and struck the "unless they expressly exclude the provisions of this Act" language from the Act.
This creates a strong argument for anyone wishing to claim that it was the express intent of the legislature to not allow parties to "opt" out of the act. Combine this with the ideas that the public policy of the act was to ensure prompt payment to contractors and subs as defined by the Mechanic's Lien act; to allow contractors and subs an additional recourse should payments not be forthcoming; to shorten the time it takes for payment and approval of work, and we end up with a decent case that parties could end up contracting around the act for naught.
This Act appears to be another wonderful brainchild of our State Government. Apparently aimed at attempting to get contractors and subcontractors paid quicker, this Act (if taken seriously) can damper commercial construction activity throughout the State of Illinois.
The timeframes and procedures do not allow the standard payout practices of submitting AIA G702-703 payout requests, Contractor's Sworn Statements and the required lien waivers needed to get escrow approval on loan payouts.
The timeframes are not even closely linked to the AIA 201 General Conditions that are widely used for the commercial sector.
In the current state government, where issues that impact so many of the taxpayers (IE: Mass Transit and Education) never get solved and passed into law until there is some embarassing political stage show, how on Earth did this Prompt Payment Act get passed without a probable way to implement it?
Commercial owners and developers that have sincere intention to pay contractors promptly can not possibly meet this Act if they use escrow agents. If anyone had the choice to build in Illinois or outside Illinois, please convince me that this Act will not repel them out of the State!
This Act will once again, increase revenue to attorneys and not help any of the parties in the construction industry!