Payment timing remains the source of many of the disputes between the various parties involved in any construction project. Nowhere is this more apparent than in the contrasting approaches taken by Massachusetts and New Hampshire.
Over the last several years, Massachusetts has emerged as one of the more strictly enforced statutorily based prompt-payment jurisdictions in the country. The Commonwealth’s rigid statutory mandate is enforced by fee-shifting and more recently the forfeiture of defenses. Meanwhile, New Hampshire continues to rely primarily on contract law and mechanics’ lien remedies, offering owners and contractors significantly more flexibility.
Recent case law has widened this divergence. Massachusetts courts are strictly enforcing statutory deadlines and procedures, while New Hampshire courts continue to resolve payment disputes through traditional breach-of-contract analysis. Massachusetts uses rigorous enforcement of deadlines that also can be a trap for the unwary. Understanding these differences is essential for any party operating in both states
Massachusetts: A statutory prompt-payment framework with teeth
Massachusetts’s Prompt Payment Act, M.G.L. c. 149, § 29E, applies to most commercial construction projects and imposes mandatory deadlines for payment application review and payment issuance. In a recent decision by the Massachusetts Supreme Judicial Court, Business Interiors Floor Covering Business Trust v. Graycor Construction Co., Inc., 494 Mass. 216 (2024), a flooring subcontractor submitted an application for payment to a general contractor, and the general contractor failed to respond to the request for over 22 days. The court determined that under the Act, the application was deemed approved, and the general contractor was obligated to pay the subcontractor in full, regardless of whether it had issues with the work. The Court further held that, as no payment was made, the general contractor was not permitted to assert or maintain any common law defenses to the subcontractor’s claim.
This “pay first and dispute later” requirement for overdue progress payments is a marked divide with similar disputes in New Hampshire, where retention of payment is a standard practice.
New Hampshire: Contract-based payment rights and lien-driven enforcement
New Hampshire has no broad private-sector prompt payment statute. Payment timing, retainage, and approval are governed principally by contract terms and common-law principles of material breach and substantial performance.
Contractors seeking leverage can file a mechanics’ lien under RSA 447, the New Hampshire Mechanic’s Lien statute. These lien rights are powerful but procedural: requiring contractors to provide notices and file court actions within strict statutory deadlines, or lose the right entirely.
Unlike Massachusetts, New Hampshire courts generally permit good-faith withholding of payment where work is incomplete or disputed, so long as the contract permits such withholding.
Charles M. Wallen is a litigation and construction attorney who focuses on construction-related disputes, insurance coverage matters, and contract enforcement, helping clients navigate complex challenges with a practical, strategic approach. He can be reached at [email protected]m.
Bernstein Shur’s Construction Group helps developers, contractors, and construction professionals manage risk and keep projects on track at every stage of the project lifecycle. The group provides sophisticated legal solutions spanning contract negotiation, project administration, dispute avoidance, and litigation, drawing on deep experience in the construction industry.