The AIA G702 and G703 are national forms. The laws governing how those forms are processed, certified, and paid vary by state. A GC operating in Texas follows different prompt payment timelines, retainage rules, and certification requirements than a GC in New York.

These differences affect every billing cycle. Missing a state-specific deadline triggers penalty interest. Exceeding a retainage cap violates state law. Using the wrong certification language on a public project can invalidate the pay application entirely.

This guide covers the state-level requirements that directly impact G702/G703 processing.

Prompt Payment Deadlines

Every state has a prompt payment act that sets maximum timelines for processing and paying construction pay applications. These timelines override any longer payment term in your contract.

The clock typically starts when the owner or GC receives a proper pay application, meaning a G702/G703 that meets contractual submission requirements. An incomplete or non-conforming submission does not start the clock, which is why submission completeness matters.

Key timeline variations:

State	Owner-to-GC Payment	GC-to-Sub Payment	Penalty Interest Rate
California	30 days after certification	7 days after GC receives payment	2% per month
Texas	35 days after receipt	7 days after GC receives payment	1.5% per month
Florida	25 business days (private) / 25 days (public)	10 days after GC receives payment	1% per month or prime + 1%
New York	Progress payments as per contract	7 days after GC receives payment	State interest rate
Illinois	30 days after approval	15 days after GC receives payment	2% per month
Pennsylvania	45 days (private) / 20 days (public)	14 days after GC receives payment	1% per month
Ohio	30 days after approval	10 days after GC receives payment	18% per year
Georgia	15 business days after approval	10 business days after GC receives payment	1% per month
Colorado	No private project statute	7 days after GC receives payment	Contractual or legal rate
Washington	30 days after approval	10 days after GC receives payment	1% per month

These timelines create a cascading obligation. When the owner pays the GC, the GC must pay subs within the state-mandated window. A GC who holds sub payments beyond the statutory deadline owes penalty interest regardless of any contract language that says otherwise.

The G702 certification date is the critical timestamp. Document when you receive the sub's G702/G703, when you certify it, and when you submit it to the owner. This timeline is your defense against prompt payment claims.

Retainage Caps by State

State retainage laws directly affect G702 Line 5 (retainage) and the G703 retainage columns. Holding more retainage than state law allows is a statutory violation, even if the subcontract authorizes a higher amount.

States with retainage caps on public projects (most common):

5% cap: Arizona, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, Wisconsin
10% cap: Alabama, Mississippi, West Virginia, Wyoming
No statutory cap: Alaska, Delaware, Kentucky, New York, North Dakota, Rhode Island, South Dakota, Vermont

States extending retainage caps to private projects:

A growing number of states apply retainage limitations to private construction as well. Colorado, New Mexico, Texas, Nevada, and Oregon have enacted private project retainage caps ranging from 5% to 10%. Check your state's current statute, as this area of law is evolving rapidly.

Retainage reduction requirements: Several states require retainage reduction after a certain completion threshold. California requires that retainage on public projects be reduced to 5% if the sub has completed 50% of their scope satisfactorily. This means your G703 retainage formula may need to change mid-project per state mandate, not just per contract terms.

Certification Language Requirements

The G702 includes certification language where the architect certifies that payment is due. On public projects, several states require specific certification language that goes beyond the standard AIA form.

States with specific certification requirements:

California: Public project pay applications must include a sworn statement that the contractor has paid all subs and suppliers from prior draws. The standard G702 certification does not include this language. GCs on California public projects must supplement the G702 or use a state-specific form.

Texas: The Government Code requires that pay applications on state-funded projects include a statement that the contractor is not in default on any contract with the state and is current on all tax obligations. This language must be added to the G702 or submitted as a separate affidavit.

Florida: Local government projects require a sworn statement of current account status with each pay application. The GC certifies that all subs and suppliers have been paid from prior draws before the current draw is processed.

New York: Public project pay applications require a detailed cost breakdown by trade that exceeds the standard G703 format. The Wicks Law applies to contracts over $500K, requiring separate prime contracts by trade, which fundamentally changes the G702/G703 relationship.

Public Project Documentation Requirements

Public projects layer additional documentation requirements on top of the standard G702/G703. Missing any required document delays payment and may violate state procurement regulations.

Common public project additions to the pay app package:

Certified payroll reports (Davis-Bacon on federal, state prevailing wage acts on state-funded)
MBE/WBE/DBE utilization reports showing subcontractor participation
Sworn statement or contractor's affidavit certifying sub payments
Schedule update demonstrating project progress
EEO compliance documentation
Sales tax exemption certificates (on tax-exempt public work)
Bond premium payment verification

Federal projects (FAR requirements): Projects governed by the Federal Acquisition Regulation use SF 1443 (Contractor's Request for Progress Payment) rather than the G702. The data fields overlap but the format differs. GCs working on both federal and non-federal projects maintain parallel billing processes.

Electronic Submission Laws

Several states have enacted laws specifically addressing electronic pay application submission, digital signatures, and electronic record retention.

States with electronic submission frameworks:

Virginia: The Virginia Electronic Transactions Act validates electronic G702/G703 submissions with digital signatures. State agencies must accept electronic submissions when offered.
California: SB 822 (effective 2024) requires state agencies to accept electronic pay applications and process them within the same timelines as paper submissions.
Texas: The Uniform Electronic Transactions Act applies to construction pay applications. Electronic signatures carry the same legal weight as wet signatures on G702 certifications.
New York: Electronic submissions are permitted but not required. The state comptroller's office has specific formatting requirements for electronic pay app submissions on state contracts.

For GCs operating across state lines, electronic submission capability is increasingly important. States that accept electronic G702/G703 submissions process payments 5-8 days faster on average than paper-only processes.

Regional Customs That Affect G702/G703 Processing

Beyond statutory requirements, regional practices shape how G702/G703 forms are processed in practice.

Northeast (NY, NJ, CT, MA): Monthly billing cycles are standard. Owner review periods tend to be longer (30-45 days). Architect certification is strictly enforced. Labor union requirements add payroll documentation to the pay app package.

Southeast (FL, GA, NC, SC): Faster payment cycles (20-30 days). Less emphasis on architect certification on private projects. More aggressive front-loading monitoring due to higher contractor default rates in hurricane-prone markets.

Midwest (IL, OH, MI, IN): Prevailing wage requirements on public projects add certified payroll complexity. Union vs. open-shop billing differences affect labor line items on the G703. Retainage release tied to substantial completion is strictly enforced.

West (CA, WA, OR): The most aggressive prompt payment enforcement. California's 2% monthly penalty creates strong incentive for timely processing. Electronic submission adoption is highest in western states. Environmental compliance documentation is sometimes required with pay applications.

Southwest (TX, AZ, NM): Retainage laws are evolving rapidly. Texas prompt payment act updates in 2023-2024 strengthened sub payment protections. Public project documentation requirements are expanding.

Building a Multi-State Compliance Process

GCs operating in multiple states need a G702/G703 process that adapts to state-specific requirements without creating a custom workflow for each state.

Build a compliance matrix. For each state where you operate, document the prompt payment deadline, retainage cap, certification language requirements, and required supporting documents. Update this matrix annually as state laws change.

Set payment timelines to the most restrictive state. If you operate in Georgia (15 business days) and Pennsylvania (45 days), build your internal process to meet the 15-day standard. Faster processing benefits cash flow and sub relationships regardless of state requirements.

Standardize documentation requirements at the highest level. If California requires sworn statements and Texas requires tax compliance affidavits, require both on all projects. Collecting more documentation than a state requires is legal. Collecting less is not.

Frequently Asked Questions

Do state prompt payment acts apply to private projects? Most states have separate prompt payment statutes for public and private projects. Private project statutes tend to have longer payment windows and lower penalty rates. Check both statutes for your state, as the applicability depends on project funding, not project type.

Can my subcontract override state retainage caps? No. State retainage caps are statutory limits that cannot be overridden by contract. A subcontract requiring 10% retainage in a state with a 5% cap is unenforceable above 5%. The sub can demand release of the excess retainage at any time.

What happens if I miss a state prompt payment deadline? Penalty interest accrues automatically from the deadline date. Most states do not require the sub to send a demand notice. The interest obligation exists by operation of law. Some states also allow the sub to recover attorney fees in a prompt payment claim.

Do I need a separate pay app process for each state? No. Build a single process that captures the most stringent requirements across all states where you operate. Add state-specific supplements (certification language, documentation) as project-level additions rather than rebuilding the entire workflow.

Are there states that require the AIA G702/G703 specifically? No state mandates the AIA form by statute. Some public agencies specify AIA forms in their contract documents, but this is a contractual requirement, not a legal mandate. Verify the contract requirements for each public project.

How do I track changing state laws? Subscribe to your state AGC chapter legislative updates. Review state prompt payment act amendments annually. The AIA also publishes state-specific contract supplements that reflect current law. Budget one hour per state per year for regulatory review.

See how SubcontractorAudit handles multi-state G702/G703 compliance. Automated retainage tracking, prompt payment deadline alerts, and state-specific documentation requirements built in. Request a demo.