What's happening
This bill requires retainage on most private construction contracts to be held in interest-bearing escrow accounts and sets rules for timely release and penalties.
Why it matters
Protects contractors’ cash flow. by ensuring that any retainage withheld must be placed in an interest-bearing escrow account, so contractors don’t lose access to their funds for extended periods without compensation.
Reduces financial risk for subcontractors. by requiring prompt release of escrowed retainage (within 30 days of final approval, and within 5 days down the payment chain), helping smaller businesses avoid harmful payment delays.
Adds meaningful penalties for late payment. by imposing a 1% per month interest penalty (in addition to escrow interest) on owners or contractors who fail to release retainage on time, creating a strong incentive for timely compliance.
Shifts ownership of retainage. to the contractor as soon as the funds are deposited in escrow, strengthening legal protections and clarity over who controls the money throughout the project.
Albany, before your first meeting.
Every bill that moved yesterday, summarized in a sentence and ranked by impact. The Albany Scorecard follows on Sundays.
Free. Unsubscribe in one click. Want alerts on specific bills? Create an account.
Who cares
Headline styles
Hold Construction Funds in Escrow
Plain English, a few words. Used as the page title.
Sponsors
Assembly Member · Assembly District 26
No co-sponsors yet.
History
- Referred to economic development
- Referred to economic development
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Construction Payments
In Senate Committee · Consumer Protection · Sponsor John A. DeFrancisco
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1294
2017-2018 Regular Sessions
IN ASSEMBLY
January 11, 2017
Introduced by M. of A. BRAUNSTEIN -- read once and referred to the Committee on Economic Development
AN ACT to amend the general business law, in relation to retention of construction contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 756-c of the general business law, as added by chapter 127 of the laws of 2002, is amended to read as follows:
§ 756-c. Retention. By mutual agreement of the relevant parties an owner may retain a reasonable amount of the contract sum as retainage[. A] and for any construction contracts, excluding construction contracts financed by a public benefit corporation, such retainage shall be deposited in a separate interest bearing escrow account with a third party escrow agent. As of the time of the deposit of the retainage, the retained funds shall become the sole and separate property of the contractor. Interest on the retained funds shall accrue at an interest rate at least equal to the prevailing interest rate paid on deposits by the escrow agent. Also, a contractor or subcontractor may [also] retain a reasonable amount for retainage so long as the amount does not exceed the actual percentage [retained] deposited in escrow by the owner. [Retainage] The escrowed retainage shall be released by the [owner] owner's written direction to the escrow agent to deliver the escrowed retainage to the contractor no later than thirty days after the final approval of the work under a construction contract. In the event that an owner fails to release the escrowed retainage as required by this article, or the contractor or subcontractor fails to release a proportionate amount of retainage to the relevant parties within five days after receipt of the escrowed retainage from the owner, (i) the owner[, contractor, or subcontractor, as the case may be, shall be subject to the payment of interest at the rate of one percent per month on the date retention was due and owing] shall be subject to the payment of inter-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03053-01-7
A. 1294 2
est, in addition to the escrow interest, at the rate of one percent per month commencing on the date the retainage was due to be released from escrow; and (ii) the contractor or subcontractor, as the case may be, shall be subject to the payment of interest on the amount of retainage it holds at the rate of one percent per month commencing on the date the retainage was due to be released by such contractor or subcontractor.
§ 2. This act shall take effect immediately and shall apply to all contracts entered into on or after such effective date.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.