The Vermont Supreme Court recently issued a ruling that should serve as a reminder to all contractors and owners of the importance of complying with prompt pay requirements.
In Dorr v. LaCoste, an owner refused to pay any part of a contractor’s inflated invoice. The Contractor sued. The court held that the owner was in the wrong for not paying the undisputed portion, and as a result, the court ordered the owner to pay its obligation, plus interest, and a penalty of 1% per month. The interest and penalties added up to nearly half of the original balance.
The takeaway from this case is that owners dealing with contractors (and contractors dealing with subs) should be extremely careful when withholding payment, and should only hold back money that is reasonably in dispute, and even then, it is essential to provide written notice of the basis for the withholding.
News and commentary from the Construction Law attorneys at Preti Flaherty.
