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South Dakota Prompt Payment Guide and FAQs

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South Dakota Prompt Payment Overview

South Dakota Prompt Payment Requirements

  • Private Jobs
  • Public Jobs
  • Top Links
NO
DAYS
Prime Contractors

Not specified in state statutes

NO
DAYS
Subcontractors

Not specified in state statutes

NO
DAYS
Suppliers

Not specified in state statutes

NO
Interest & Fees

Not specified in state statutes

45
DAYS
Prime Contractors

For Prime (General) Contractors, payments due within 45 days of invoice. Can be modified by contract

30
DAYS
Subcontractors

For Subcontractors, payment due within 30 days from payment received from above.

30
DAYS
Suppliers

For Suppliers, payment due within 30 days from payment received from above.

1.5%
/ MONTH
Interest & Fees

Interest at 1.5% month

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Prompt payment laws are a set of rules that regulate the acceptable amount of time in which payments must be made to contractors and subs. This is to ensure that everyone on a construction project is paid in a timely fashion. These statutes provide a framework for the timing of payments to ensure cash flow and working capital.

Projects Covered by Prompt Payment in South Dakota

The prompt payment laws in South Dakota only regulate public works projects within the state. These can be found in S.D. Codified Laws §§5-26-1 to 5-26-8. There are no provisions covering payments on private projects, those will be regulated by the terms of the contract.

Payment Deadlines for Public Projects

Payments made from the public entity to the prime contractor will be determined by the contract terms. However, if the contract is silent, then the prompt pay deadlines are enforced, which requires payments to be made to the prime contractor within 45 days of receipt of a request for payment. As for payments to subcontractors and suppliers down the payment chain, payments must be made within 30 days of the higher-tiered party receiving payment.

Penalties for Late Payment on Public Projects

The South Dakota prompt payment statute provide reasons that payment can be properly withheld. If these reasons aren’t present, and payment is late or wrongfully withheld, interest will begin accruing. The interest will accrue at a rate of 1.5% per month.

South Dakota Prompt Payment Frequently Asked Questions

South Dakota’s prompt payment statutes set forth specific timeframes for when general contractors, subcontractors, suppliers, and others involved with a public construction project must be paid. This page provides an overview of these regulations and addresses frequently asked questions related to the South Dakota prompt payment laws.

South Dakota Prompt Payment Private Projects FAQs

Does South Dakota have Prompt Payment Statute on Private Projects?

South Dakota does not provide a prompt payment statute for private projects.

South Dakota Prompt Payment Public Projects FAQs

Do I have to send a letter or file anything to qualify for Prompt Payment Penalties or Remedies in South Dakota?

In order for the provisions of the South Dakota prompt pay statutes to apply, the party requesting payment must be entitled to payment pursuant to the terms of the contract. If the contract doesn’t specify an exact time at which a party is entitled to payment, the clock starts running upon written acceptance of the labor and/or material furnished as well as the furnishing of an invoice covering same.

Can I include Prompt Payment Fees in my South Dakota Mechanics Liens Claim or Bond Claim?

No. South Dakota doesn’t allow miscellaneous amounts to be included on the face of a bond claim.

If I am paid late according to Prompt Payment Statutes, can I obtain interest or other Penalty Payments?

There is no specific requirement for interest to being to accrue on late payments in South Dakota other than the requirement that the payment must be late pursuant to the prompt pay statute.

Are there reasons for which payment may be withheld past the general deadline?

South Dakota allows payments to be withheld if the amount due is disputed, or if there is a dispute over compliance with t he contract. However, if the payments are withheld, written notice of the details of the dispute must be delivered to the party requesting payment.

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South Dakota Prompt Payment
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South Dakota Prompt Payment Statutes

Getting informed about prompt payment laws is important. An examination of South Dakota’s prompt payment laws, the rules and regulations related to payment timing, is important to know your rights and responsibilities as a party on a construction project. South Dakota’s specific laws can be found in: S.D. Codified Laws §§ 5-26-1 – 5-26-8, and are reproduced below.

Prompt Payment Statute on Private Projects

Does South Dakota address Prompt Payment for private jobs?

South Dakota does not address prompt payment for private jobs in its statute.

Prompt Payment Statute on Public Projects

§ 5-26-1: Definitions

1)  “Agency,” each association, authority, board, branch, commission, committee, council, department, division, office, officer, system, task force, or other agent of the state government vested with the authority to exercise any portion of the state’s sovereignty and any county, municipality, public school district, and any officer, board, or commission empowered by law to enter into contracts for the construction of public improvements or for providing public services;
(2)  “Business,” a business, institution, association, profession, occupation, or calling of every kind, whether or not conducted for profit;
(3)  “Contract,” invoice, purchase order, or vendor contract;
(4)  “Property,” anything of value, including but not limited to, real estate, tangible and intangible personal property, contract rights, choses-in-action and other interests in or claims to wealth, admission or transportation tickets, captured or domestic animals, electric or other power and signatures which purport to create, maintain, or extinguish any legal obligation;
(5)  “Service,” labor that does not include a tangible commodity. The term includes, but is not limited to: labor; professional advice; telephone, cable television, and other utility service; accommodations in hotels, restaurants, or elsewhere; admissions to exhibits and entertainments; the use of machines designed to be operated by coin or other thing of value; and the use of rented real or personal property.

§ 5-26-2: Deadlines for Payments

Deadlines for payments. An agency which acquires property or services pursuant to a contract with a business shall pay for each complete delivered item of property or service on the date required by contract between the business and agency or, if no date for payment is specified by contract, within forty-five days after receipt and written acceptance of property or services and receipt of the invoice covering the delivered items or services.

§ 5-26-3: Interest on Overdue Payments; Compounding; Rate

Interest on overdue payments–Rate–Compounding. Proper invoices not paid within forty-five days shall accrue interest beginning on the thirtieth day after receipt of property or service and receipt of the invoice covering the delivered items or services. Interest shall accrue and be charged on payments overdue under § 5-26-2 at one and one-half percent per month or at the rate specified by contract.
Interest which is unpaid at the end of each sixty-day period or at the end of any specified period provided by contract shall be added to the principal amount of the debt and shall thereafter accumulate interest.

§ 5-26-3.1: Payment of less than five dollars in Interest Prohibited

Payment of less than five dollars in interest prohibited. No agency is required to pay interest due because of late payment if the interest is less than five dollars.

§ 5-26-4: Additional Appropriations

Additional appropriations for interest prohibited. An agency may not seek additional appropriations to pay interest which accrues as a result of its failure to make timely payments required by § 5-26-2.

§ 5-26-5: Disputed Payments Exempt; Notice of Dispute Required

Disputed payments exempt–Notice of dispute required. This chapter is not applicable if an agency’s failure to timely pay interest required by § 5-26-3 is the result of a dispute between the agency and the business over the amount due or over compliance with the contract. In case of dispute, the agency shall, within ten days of receipt of property or services and receipt of invoice, give written notice to the business of disagreement with property or services. The notice shall include the reasons for and other pertinent details of the dispute and a copy of the notice shall be timely filed with the state auditor or treasurer or finance officer of the agency.

§ 5-26-6: Time for payments to subcontractors and suppliers--Interest on overdue amounts--When payments due

Time for payments to subcontractors and suppliers–Interest on overdue amounts–When payments due. Upon payment by an agency, a business which has acquired under contract, property or services in connection with its contract with such agency from a subcontractor or supplier, shall pay the subcontractor or supplier within thirty days after receiving payment from the agency. Interest at the rate of one and one-half percent per month shall accrue and is due any subcontractor or supplier who is not paid within thirty days after the business receives payment from the agency, unless otherwise provided by contract between the business and the subcontractor or supplier. Interest begins to accrue on the thirty-first day at the rate specified in this section. Payment shall be due when the subcontractor or material supplier have satisfied the terms of their contract or material delivery agreement.

§ 5-26-7: Citation of Chapter

This chapter may be cited as the South Dakota Prompt Payment Act.

§ 5-26-8: Exemptions of transactions between government agencies

The provisions of this chapter do not apply to transactions between government agencies unless otherwise authorized by statute.

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