Texas Prompt Payment Act: deadlines for contractors and subcontractors

Which construction payments does Chapter 28 cover?

An invoice can be overdue under a contract before you have proved a statutory prompt payment violation. Texas Property Code Chapter 28 sets payment rules for covered private real-property improvements. Start by identifying who owes your business, your position in the contract chain and the event that starts the applicable clock.

The chapter defines an owner as a person or entity other than a governmental entity. It addresses amounts allowed under the contract for properly performed services or suitably stored or specially fabricated materials. A balance shown in your accounting software is useful evidence, but it does not establish every legal condition by itself.

Public projects need a separate analysis. If a city, school district or another governmental entity owns the project, use the Texas public works payment bond claim guide to understand that different claim framework. Do not apply a private-project payment calendar to a public contract without reviewing the governing rules.

For covered state/local public payments, review Government Code Chapter 2251 separately. Sections 2251.022–.023 generally use a tenth-day downstream payment date and eleventh-day overdue point; the private seven-day rule and 1.5% monthly interest should not be copied into a public-project demand. Public payment-bond preservation is another distinct Chapter 2253 process.

The 35-day owner rule and seven-day downstream rule

Section 28.002 generally requires the owner to pay the contractor by the 35th day after receiving a written payment request for a qualifying amount. The request must relate to work or materials covered by the contract and statute. Save proof of when the owner received it, rather than relying only on the date typed on the invoice.

When a contractor receives an owner payment, the contractor generally must pay each subcontractor the portion attributable to that subcontractor's work or materials within seven days. That includes the relevant interest, to the extent the owner payment includes interest attributable to that work.

The same basic downstream rule applies when a subcontractor receives payment and owes its own subcontractor. For that seven-day rule, the key event is receipt of the attributable upstream payment. Sending an invoice seven days ago is not the same event.

These are general Chapter 28 rules, not every possible contract due date. Section 28.006(b) permits a specified written owner–contractor single-family provision, while Section 28.008 changes owner timing only when its lender conditions are met. Do not import Chapter 53's weekend/holiday notice extension into this payment example without separate authority.

Worked example: partial upstream payment and three separate records

Hypothetical assumptions: a privately owned Texas commercial improvement, a January 5, 2026 original owner–contractor contract and a first-tier electrical subcontractor. All $18,000 concerns ordinary labor performed in January 2026. No retainage, tax, credit, interest payment, good-faith dispute, contingent-payment issue or lender-disbursement exception is included. These simplified facts illustrate separate triggers, not an opinion that a real claim is enforceable.

The subcontractor invoices the contractor on February 2. The owner receives the contractor's qualifying written request on February 3. The owner's general 35th-day payment date is March 10. The contractor actually receives a partial owner payment on March 10; supported remittance identifies $12,000 as attributable to this subcontractor. That covered $12,000 has a March 17 seventh-day downstream date. The remaining $6,000 is still open in the subcontractor's ledger, but this particular $12,000 receipt does not establish a receipt trigger for the other $6,000.

Assume the contractor pays $8,000 on March 17 and the subcontractor receives and allocates it to this invoice that day. The original $18,000 invoice now has $10,000 open: $4,000 of the identified $12,000 attributable payment remains unpaid, plus the other $6,000. Under these assumptions, March 18 is the interest-start date for the $4,000 unpaid amount required from that receipt. The $10,000 accounting balance is not automatically the interest principal. Other contractual obligations or another attributable receipt require their own review.

The January work also has an independent April 15, 2026 ordinary private-commercial monthly-notice review date under the assumed current Chapter 53 rules. February invoicing, March receipts, collection promises and a prompt-payment demand do not restart that work-month clock. Reconcile the actual unpaid claim at the notice cutoff and separately review notice content, recipients, delivery, affidavit and enforcement requirements.

Payment timing and lien preservation need separate calendars

Section 28.007(b) keeps Chapter 53 rights and obligations separate. A request that seeks payment or interest does not automatically satisfy a statutory lien notice. Likewise, a notice that preserves a claim does not prove the entire amount is currently payable under Chapter 28.

Start with the monthly notice guide for ordinary unpaid work; use the retainage notice guide for the distinct retained-funds review. Keep recipient and delivery evidence with each actual notice. An optional demand and a required notice may serve different purposes even when they refer to the same invoice.

If the upstream receipt date or allocation is unknown, mark that payment-trigger field unverified. Request the receipt/remittance support and track any separate contract due date. Continue reviewing applicable notice deadlines while the payment question is unresolved; do not invent a receipt or assume that lack of evidence means no payment obligation.

What changes when payment is disputed?

Section 28.003 permits withholding in a good-faith dispute, within statutory limits. For improvements other than the specified detached single-family category, the allowed withholding is generally no more than 100 percent of the difference between the disputed positions. For a detached single-family residence, duplex, triplex or quadruplex, the statute uses a 110 percent limit.

These rules do not mean that a payer can label an entire account disputed and ignore the allocation. Identify the actual issue: a quantity disagreement, allegedly defective work, a credit, a disputed change order or another documented reason. Preserve both parties' calculations and distinguish an undisputed balance from the disputed amount.

Chapter 28 also includes a specific exception involving delayed lender disbursement, with conditions that must be met. A generic statement that financing is delayed is not enough to establish that exception. Contract provisions and other applicable law can affect the analysis, so have a qualified reviewer assess the actual documents before making a legal demand.

Separate illustration, not a deduction in the $18,000 example: if the commercial payee claims $20,000 and the payer claims $18,000 is owed, the difference is $2,000. Section 28.003(b)'s 100% ceiling is $2,000, assuming a genuine qualifying good-faith dispute. A label alone does not establish that exception; do not withhold another $2,000 on top of the same difference.

Interest, attorney fees and stopping work

Under Section 28.004, an unpaid amount required under the chapter begins accruing interest the day after the payment is due, at 1.5 percent for each month. First establish the covered amount and correct due date. Applying that rate to every open invoice, disputed item or future retainage amount without analysis can overstate the demand.

Section 28.005 allows an action to enforce the chapter and permits a court to award costs and reasonable attorney fees as it considers equitable and just. Attorney fees are not an automatic add-on simply because a collection email quotes the statute.

Section 28.009 provides a suspension procedure with written-notice requirements and limits, including exclusions for certain projects. Do not stop work solely because a dashboard marks an invoice overdue. Review project eligibility, the notice recipients, contractual duties and the statutory procedure with counsel before taking that step.

Build a payment evidence file before escalating

Create one evidence file for the invoice rather than scattering receipt dates across email, bank statements and text messages. Attach the executed contract, relevant change orders, work backup, written request, delivery evidence, payment ledger and any explanation of withholding.

For a subcontractor, preserve information showing when the contractor received the owner payment and which work it covered. If you lack that information, record the uncertainty and request a documented explanation. An estimated receipt date should not become a verified legal trigger merely because it was entered into a spreadsheet.

Connect this payment file to the Texas mechanics lien preparation checklist. A reconciled balance and reliable source records help both workflows, but a prompt payment demand does not itself serve as every notice required to preserve lien rights.

When the unpaid balance involves extra work or a deduction, review the Texas unpaid change-order guide and Texas subcontractor back-charge checklist before combining the amounts. For evidence about upstream receipts and use of project money, see Texas construction trust funds and payment records.

• Identify the owner, direct customer and contract tier.
• Save the written request and actual receipt evidence.
• Separate earned amounts, disputed items, credits and retainage.
• Record each payment's receipt date and work allocation.
• Keep notice deadlines on their own calendar.
• Have a reviewer check the amount and legal basis before escalation.

Illustrative overdue-interest check

A simple illustration using Chapter 28's stated monthly rate: $10,000 of covered overdue principal multiplied by 1.5% is $150 for one monthly period. This does not establish that your whole invoice bears interest or settle partial-period calculations, disputes or payment allocations.

Show the principal, applicable due-date trigger, start of overdue period and each payment separately. Avoid silently charging interest on retainage or disputed items without checking whether they are due and covered. Keep the calculation with the payment demand, rather than presenting an unsupported penalty as a settled fact.

Texas prompt payment questions

Does every Texas construction invoice become payable after seven days? No. The downstream statutory rule generally starts when the contractor or subcontractor receives the attributable upstream payment. The owner's general rule uses receipt of a qualifying written payment request and a 35-day period. Contract terms may create separate obligations.

Does the Prompt Payment Act preserve a mechanics lien automatically? No. Chapter 28 expressly does not change rights and remedies under Chapter 53. Follow the applicable notice, filing and enforcement requirements separately, using the Texas mechanics lien process guide as an operational overview.

Can I demand interest on the full unpaid account? Establish which amount was required under the chapter, when it became due and how payments or valid withholding affect it. A single total in an aging report does not answer those questions.

Should I suspend work immediately after a missed payment? No immediate suspension right follows from an overdue label alone. The statute has a specific procedure and exclusions. Obtain project-specific advice before stopping performance.