SB171 Alabama 2011 Session

Summary

Primary Sponsor

Del Marsh

Republican

Session

Regular Session 2011

Title

Public contracts, waiver of payment within 30 days prohibited, interest added on any dollar amount approved and unpaid, certification and proof of certification of availability of funds, attorney fees and court costs, Sec. 41-16-3 am'd.

Summary

SB171 tightens payment rules for Alabama public contracts by banning 30-day payment waivers, adding interest on late payments, requiring funds certification, and allowing winning parties to recover attorney fees and costs.

What This Bill Does

If the state is a party to a contract, payments must be made within 30 days after the other party completes its work; otherwise, 1% interest is added each month until payment is made. The contract must certify that funds are available to remit payment, and proof of funds must be provided before assuming responsibility. In civil cases, the winning party can recover reasonable attorneys' fees and court costs. The bill also requires payments received from the state to be passed to subcontractors and sub-subcontractors, allows withholding in bona fide disputes (up to twice the disputed amount), and includes notification and retainage provisions.

Who It Affects

• State of Alabama and prime contractors involved in public contracts would need to ensure timely payment, provide proof of available funds, and follow the rules for distributing payments to subcontractors.
• Subcontractors and sub-subcontractors working under public contracts would benefit from quicker payment, potential interest on late payments, and the ability to recover attorneys’ fees and court costs if they prevail in a dispute.

Key Provisions

• Prohibits waiving payment within 30 days after completion of a public contract and imposes interest of 1% per month (or fraction) on any unpaid approved amount.
• Requires the contract to certify that funds are secured to remit payment and to provide proof of availability of funds before the party executes the contract responsibilities.
• Entitles the prevailing party in a civil action (owner, contractor, or subcontractor) to recover reasonable attorneys' fees and court costs.
• Requires payments received from the state to be passed through to subcontractors and sub-subcontractors in proportion to their interest, with interest to be included where applicable, and provides a seven-day payment window after receipt of state funds if terms are not otherwise agreed.
• Allows withholding of payments in bona fide disputes up to twice the disputed amount and requires timely notification about disputed payment requests (15 days for owners, 5 days for contractors/subcontractors).
• Retainage rules: the amount withheld by the contractor from a subcontractor shall not exceed the state's retainage unless interest is applied to the withheld amount.
• Effective date: the act becomes law on the first day of the third month after passage and the governor's approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Contracts