A contractor submits a progress payment application on the 5th of the month. Under prompt payment requirements, what is the latest date the owner must pay without incurring interest penalties?
Correct Answer
A) 35th day from submission
California prompt payment law generally requires payment within 30 days, with interest accruing after that period. Some contracts may specify different terms, but 30-35 days is typical.
Why This Is the Correct Answer
California's prompt payment law (Business & Professions Code §7108.5 and Civil Code §8800 et seq.) requires owners to pay contractors within 30 days of receiving a proper pay application. Submitted on the 5th, day 30 lands on the 35th of that month (i.e., the 4th of the following month). Payment on or before that date avoids interest penalties, which accrue at 2% per month on the unpaid balance.
Why the Other Options Are Wrong
Option B: 15th of the month
The 15th of the month is only 10 days after submission—far shorter than the 30-day window California law provides. This deadline would apply only if the contract specifically shortened the payment period, which is unusual and still must meet statutory minimums.
Option C: 25th of the month
The 25th of the month represents 20 days after submission. While some contracts set a 20-day schedule, the statutory default under California prompt payment law is 30 days, making the 25th too early to be the legal deadline.
Option D: 20th of the month
The 20th is only 15 days from submission. This timeframe is too short to satisfy the 30-day statutory requirement and has no basis in California prompt payment statutes for standard progress payment applications.
Memory Technique
Think 'thirty days hath the owner' — just like the rhyme for days in a month. Submit on day 5, count 30 days forward, that is day 35 (or the 4th of the next month). The number 30 is your anchor for California prompt payment.
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