SB 1285 Summary

• Reduces retention requirements on construction contracts from 10% to 5% for state agencies, counties, schools, and local public works projects, allowing contractors to be paid more promptly during project completion.

• Establishes strict 14-day payment deadlines for progress payments, retention releases, and final payments once work estimates are certified and approved, with 1% monthly interest on late payments.

• Adds prompt payment protections requiring contractors to pay subcontractors and material suppliers within 7 days of receiving payment, with limits on retention amounts contractors can withhold from subcontractors.

• Allows contractors and subcontractors to suspend performance or terminate contracts for non-payment without being in breach, requiring written notice before suspension (7 days for contractors, 3-7 days for subcontractors depending on circumstances).

• Voids contract provisions that prevent parties from suspending performance due to non-payment or require disputes be resolved outside Arizona, and requires all mediation/arbitration on Arizona construction contracts to occur in Arizona.