What's happening
This bill defines "substantial completion" in construction contracts and limits retainage to 5% to expedite payments.
Why it matters
Creates a clear legal definition of “substantial completion,”. making it easier to determine when contractors are entitled to final payments, reducing disputes between contractors and owners about when work is considered practically finished.
Limits retainage (the portion of payment withheld until completion) to no more than 5% of the contract total,. providing greater cash flow stability for contractors and subcontractors, particularly benefiting smaller firms that often face financial strain from higher retainage rates.
Requires retainage to be released within 30 days of final approval,. ensuring that contractors and subcontractors receive withheld funds promptly, which can help them pay workers, suppliers, and invest in new projects more quickly.
Imposes a penalty interest rate (1% per month) for late retainage payments,. motivating owners and contractors to comply with payment timelines and protecting the financial interests of those performing the work.
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Who cares
Construction project owners
The bill would cap their retainage at five percent of the contract sum and allow contractors to submit final invoices at substantial completion rather than after fulfilling all contract obligations.
General contractors
They could invoice for payment in full once work is sufficiently complete for its intended use, but could withhold no more than five percent in retainage or the actual percentage retained by the owner.
Subcontractors
The bill would limit retainage withheld from their payments to five percent or the owner’s actual retained percentage, whichever is lower, and apply the same limits to retainage they withhold.
Headline styles
Limit Construction Payment Delays
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
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.
Limit Construction Payment Withholding
In Senate Committee · Consumer Protection · Sponsor Neil D. Breslin
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
3558
2019-2020 Regular Sessions
IN ASSEMBLY
January 29, 2019
Introduced by M. of A. CUSICK -- read once and referred to the Committee on Economic Development
AN ACT to amend the general business law, in relation to payment and retainage in construction contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 756 of the general business law is amended by adding a new subdivision 7 to read as follows:
7. "Substantial completion" means the state in the progress of the project when the work required by the construction contract with the project owner is sufficiently complete in accordance with the construction contract so that the project owner may occupy or utilize the work for its intended use; provided further, that "substantial completion" shall apply to the entire project or a portion of the entire project if the construction contract with the project owner provides for occupancy or use of a portion of the project.
§ 2. The opening paragraph of paragraph (a) of subdivision 2 of section 756-a of the general business law, as amended by chapter 417 of the laws of 2009, is amended to read as follows:
A contractor shall be entitled to invoice the owner for interim payments at the end of the billing cycle. A contractor shall be entitled to submit a final invoice for payment in full [upon the performance of all the contractor's obligation under the contract] upon reaching substantial completion under the construction contract.
§ 3. 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] no more than five per centum of the contract sum as retainage. A contractor or subcontractor may also retain [a reasonable amount] no more than five per centum for retainage [so long as the amount does not] and in no case shall retainage exceed
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00021-01-9
A. 3558 2
the actual percentage retained by the owner. Retainage shall be released by the owner 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 retainage as required by this article, or the contractor or subcontractor fails to release a proportionate amount of retainage to the relevant parties after receipt of retainage from the owner, 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.
§ 4. This act shall take effect immediately and shall apply to 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.