If you perform labor or provide materials for a public (government-owned) project in Arizona, there are a few unique provisions in Arizona’s public bond laws that are designed to speed the flow of funds from the general contractor to lower parties in the chain. Like in many other states, the general contractor is required to pay its subcontractors and suppliers within a certain time period from receiving a payment for the project. In Arizona, the general contractor must pay its subcontractors within seven days after the date a progress payment is received from the public owner. Likewise, a subcontractor is required to pay its subcontractors and suppliers within seven days after the date it receives a payment from the general contractor.
Additionally, a subcontractor may give notice to the public owner requesting that the public owner notify the subcontractor in writing of every progress payment made by the public owner to the general contractor. The public owner is then required to give written notice of payment to the subcontractor within five days after each progress payment is made to the general contractor.
Arizona statutes also allow the subcontractor who fails to receive payment to file a complaint form with the Arizona Registrar of Contractors. Any failure by the contractor or subcontractor to make timely payments is considered grounds for “disciplinary action” by the Arizona Registrar of Contractors. The Registrar and public owner are then supposed to ask the general contractor/subcontractor for an accounting. This potential remedy may be beneficial if the subcontractor has failed to properly preserve their bond rights.