Governor Wolf Approves a Major Overhaul of Pennsylvania’s Contractor and
Subcontractor Payment Act
Focused on You. Dedicated to Your Success.
September 17, 2018

The  Contractor and Subcontractor Payment Act (CASPA) was passed in 1994 as a means for Pennsylvania contractors and subcontractors to facilitate payment for services rendered on a project.  CASPA was intended to resolve issues caused by lien waivers. Pennsylvania’s Mechanics’ Lien Law of 1963 generally required contractors and subcontractors to sign lien waivers in certain situations.

On June 12, 2018, Governor Wolf signed ACT 27 , which prohibits waivers of the payment act’s provisions that are against the terms of the Act.

The Act allows a contractor or subcontractor to suspend its performance until payment is received. 

The Act states: “If an owner withholds payment from a contractor for a deficiency item, [it] the amount withheld shall be reasonable and the owner shall notify the contractor of the deficiency item by a written explanation of its good faith reason within [seven] 14 calendar days of the date that the invoice is received. Failure to comply shall constitute a waiver of the basis to withhold payment and necessitate payment of the contractor in full for the invoice. If an owner withholds payment from a contractor for a deficiency item, the owner shall remit payment to the contractor for each other item that has been satisfactorily completed under the construction contract.”

Furthermore, the withholding of retainage for longer than 30 days after final acceptance of the work shall be subject to the obligations imposed upon the owner, contractor, or subcontractor

Act 27 is effective as of October 10, 2018. 

Feel free to call any member of our team at 610-828-1900 with questions. You can also contact me at . We are always happy to help.
Martin C. McCarthy, CPA, CCIFP
Managing Partner
McCarthy & Company, PC

Disclaimer This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).