§ 27A–104. Prompt payments to subcontractors.

(a) If a contract is between a contractor and subcontractor, or between subcontractors, the contractor or subcontractor shall pay undisputed amounts owed to its subcontractor within 7 days after receipt by the contractor or subcontractor of each payment received for its subcontractors' work or materials.

(b) Notwithstanding subsection (a) of this section, conditions of payment to the subcontractor on receipt by the contractor of payment from the owner may not abrogate or waive the right of the subcontractor to:

(1) Claim a mechanics' lien; or

(2) Sue on a contractor's bond.

(c) Any provision of a contract made in violation of subsection (b) of this section is void as against the public policy of the District.

(d)(1) A contractor or subcontractor shall not deduct or withhold a subcontractor's or lower-tiered subcontractor's payment for the purpose of offsetting any other contractual obligation or work to be completed.

(2) Any contract or subcontract provision in a contract executed after March 31, 2023, that allows a contracting party to withhold funds due under one contract or subcontract for alleged claims or damages due on another contract or subcontract is void as against public policy.