May 13, 2026

As of January 1, 2026, California contractors have a legal right most are not using.

Under SB 440, if an owner fails to pay you on time for undisputed work, interest accrues at 2% per month on the unpaid balance. That’s 24% annually. You also now have the right to suspend work if payment isn’t made — with proper written notice.

SB 61 adds another layer: retention on private projects is now capped at 5%. If your current contracts still allow 10% retention, those terms are no longer enforceable. You need to update your contract templates now.

These laws exist. They are in effect. But they only protect you if your contracts and claim procedures are set up correctly. If you’re submitting verbal requests instead of certified mail claims, you’re leaving the protection on the table.

Review your contracts. Update your retention language. Know your SB 440 claim rights. The law is on your side — but only if you use it.

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#Construction #California #Contractor #SB440 #CashFlow #ContractorCPA

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.