A contractor completes $15,000 worth of electrical work on a commercial building. The property owner disputes $3,000 of the charges. Under California prompt payment law, what amount must the owner pay within the required timeframe to avoid penalties?
Correct Answer
B) $12,000 - the undisputed amount
Under California law, the property owner must pay the undisputed portion ($15,000 - $3,000 = $12,000) within the required timeframe.
Why This Is the Correct Answer
Under California's prompt payment laws, property owners cannot withhold the entire payment when only a portion is disputed. They must pay the undisputed amount within the required timeframe to avoid penalties. In this case, $15,000 total minus $3,000 disputed equals $12,000 that must be paid promptly. The disputed portion can be withheld pending resolution, but the undisputed work must be compensated according to statutory requirements.
Why the Other Options Are Wrong
Option A: $0 - they can withhold payment until dispute is resolved
This is incorrect because California law prohibits withholding the entire payment when only a portion is disputed. Property owners must pay the undisputed amount within the required timeframe or face penalties, even while disputes are being resolved.
Option C: $3,000 - only the undisputed amount
This confuses the disputed amount ($3,000) with the undisputed amount. The undisputed amount is the total work completed ($15,000) minus the disputed portion ($3,000), which equals $12,000 that must be paid promptly.
Option D: $15,000 - the full amount
While the contractor performed $15,000 worth of work, the owner has legitimately disputed $3,000. California law allows withholding of disputed amounts pending resolution, so the full amount is not required immediately.
Memory Technique
Remember 'Pay the CLEAR, Hold the UNCLEAR' - pay the undisputed (clear) portion promptly, hold only the disputed (unclear) amount.
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A general contractor hires a subcontractor for $22,000. The general contractor receives payment from the owner but fails to pay the subcontractor within how many days, subjecting themselves to penalty interest?
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