A general contractor receives a $25,000 progress payment from the owner. The contractor has $8,000 in subcontractor invoices and $3,000 in material supplier invoices that are due. Under California prompt payment law, how long does the contractor have to pay the subcontractors?
Correct Answer
B) 7 days from receipt of payment
California prompt payment law requires contractors to pay subcontractors within 7 days of receiving payment from the owner for work performed by those subcontractors.
Why This Is the Correct Answer
7 days from receipt of payment is correct. California Civil Code Section 8814 (formerly Section 3260.1) requires a general contractor to pay subcontractors within 7 days of receiving payment from the owner for work performed by those subcontractors. This 'pay-when-paid' cascade is strictly timed at 7 days to protect subcontractors from cash flow delays.
Why the Other Options Are Wrong
Option A: 15 days from receipt of payment
15 days is incorrect. California prompt payment law sets a 7-day deadline for GC-to-subcontractor payments — not 15 days. A 15-day window is associated with other payment contexts and would expose subcontractors to unnecessarily long delays.
Option C: 10 days from receipt of payment
10 days is incorrect. While 10 days is a common deadline in various construction law contexts, it is not the California prompt payment period for contractor-to-subcontractor payments. The correct period is 7 days.
Option D: 30 days from receipt of payment
30 days is incorrect. Thirty days is far too long and would be a significant violation of California's prompt payment statute. Thirty days may apply to owner-to-GC payment timelines in certain contract contexts, but not to GC-to-subcontractor payments after the GC receives funds.
Memory Technique
Think '7 days = one week.' Once the GC gets paid on Monday, the subs must be paid by the following Monday. A simple one-week rule protects cash flow down the chain.
More California Questions
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A swimming pool contract for $28,000 is signed on Wednesday at the customer's home. The contract includes proper cancellation notices. If the customer wants to cancel, they must do so by when?
Under California's prompt payment law, if a contractor submits a proper payment request to a property owner, payment is due within how many days?
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?
Under California Civil Code Section 8180, when must a subcontractor serve a preliminary notice on a private work project?
Which of the following contracts is NOT subject to the 3-day right to cancel under California law?
A subcontractor completes roofing work on Tuesday, March 15th. The general contractor is paid by the owner on Friday, March 25th. Under California prompt payment laws, what is the latest date the general contractor must pay the subcontractor?
A contractor receives a progress payment of $18,000 from a property owner on Monday. The contractor owes subcontractors $12,000 of this amount. By what day must the contractor pay the subcontractors?
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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?