California prompt payment

Who and what this applies to

Private progress payments under Civil Code §8800 and public-project downstream payments under Public Contract Code §10262.5.

The rules

• Unless otherwise agreed in writing, an owner pays a qualifying contractual private progress payment within 30 days after notice demanding payment. A good-faith dispute permits withholding no more than 150% of the disputed amount; wrongful withholding carries the statutory 2% monthly penalty. Source
• On covered public work, a prime contractor or subcontractor pays its subcontractor within seven days after receiving the corresponding progress payment. A good-faith dispute permits withholding no more than 150% of the disputed amount; wrongful withholding carries a 2% monthly penalty under §10262.5. Source

Primary sources

• Cal. Civ. Code §8800(a)–(c)
• Cal. Pub. Contract Code §10262.5

Sources reviewed 2026-09-30. This guide covers the projects and rules stated above.

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