Illinois Prompt Payment Act Checklist and FAQs

Payment disputes on Illinois construction jobs often turn on dates: when an application arrived, when a written objection went out, and when money moved down the chain. This checklist puts those dates in one place. See the rules and numbers and the overview. Lender claims on business assets are covered in the Illinois UCC guide.

The Copper Ladder Payment Check

1. Confirm the job is covered: a private project, not a single-family home or a multi-family residence of 12 or fewer units in one building, and no public funds.
2. Log the date each payment application arrives. Day 25 is the cutoff for a written statement of the amount withheld and the reason.
3. If part of the work does not conform, hold back only that part's reasonable value and pay for the rest.
4. Track when money arrives. Each contractor and subcontractor passes payment for accepted work down within 15 calendar days of receiving it.
5. Compare the retainage clause with the cap: 10% of each payment before the job is 50% complete, then no more than 5% held.
6. Before stopping work for non-payment, send 7 calendar days' written notice to the party that failed to pay.
7. Keep one payment log per job, with dates received, approved and paid and the retainage held. Your bookkeeping records can supply most of it.

Common mistakes

• Missing the 25-day deadline for a written withholding statement, so the application is deemed approved.
• Treating an instruction to the lender or architect as approval. The Act says it is not.
• Holding retainage above 10% before the halfway point, or not dropping to 5% at 50% completion.
• A prime contractor waiting beyond 15 days after receiving funds before paying subcontractors for accepted work.
• Suspending work without 7 calendar days' written notice.
• Assuming the Act covers a home project or a public job. Both are excluded.

When to talk to an attorney

• A payment dispute, a lien claim or Mechanics Lien Act deadlines are in play.
• Deciding whether to suspend work, or whether a contract falls inside the residential or public-funds exclusions.
• Drafting or negotiating retainage, pay-if-paid or payment-schedule clauses.
• A project is partly public and partly private.

A CPA cannot answer those legal questions. A CPA can help with the payment records, cash-flow and tax side for contractors, and works alongside the owner's attorney.

Frequently asked questions