What's happening
This bill requires a surety bond or irrevocable letter of credit for certain public improvement projects without an established public fund.
Why it matters
Protects workers and suppliers. By requiring a surety bond or irrevocable letter of credit when no public fund exists, the bill ensures that contractors, subcontractors, and suppliers will be paid for their work and materials, even if the project faces financial issues.
Shifts financial risk away from the public sector. The requirement places the onus on private entities benefiting from public improvement projects to guarantee payment security, reducing the financial risk for workers and the state.
Favors licensed and regulated financial instruments. The amendment limits acceptable guarantees to surety bonds from New York-licensed sureties or irrevocable letters of credit, increasing accountability and reliability compared to broader or less-regulated forms of undertakings.
May affect project costs and timelines. Contractors and private entities may face higher upfront costs and administrative steps to secure these bonds or letters of credit, potentially impacting bids, timelines, or the willingness of some firms to participate.
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Who cares
Headline styles
Require Contractor Surety Bonds
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to judiciary
- Print number 5471a
- Amend (t) and recommit to judiciary
- Referred to judiciary
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.
Require Contractors' Payment Bonds
In Senate Committee · Judiciary · Sponsor Neil D. Breslin
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5471--A
2019-2020 Regular Sessions
IN ASSEMBLY
February 12, 2019
Introduced by M. of A. CUSICK -- read once and referred to the Committee on Judiciary -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the lien law, in relation to requiring a surety bond for contractors and subcontractors where no public fund has been established for the financing of a public improvement
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 5 of the lien law, as amended by chapter 155 of the laws of 2004, is amended to read as follows:
§ 5. Liens under contracts for public improvements. A person performing labor for or furnishing materials to a contractor, his or her subcontractor or legal representative, for the construction or demolition of a public improvement pursuant to a contract by such contractor with the state or a public corporation, and any trust fund to which benefits and wage supplements are due or payable for the benefit of such person performing labor, shall have a lien for the principal and interest of the value or agreed price of such labor, including benefits and wage supplements due or payable for the benefit of any person performing labor, or materials upon the moneys of the state or of such corporation applicable to the construction or demolition of such improvement, to the extent of the amount due or to become due on such contract, and under a judgment of the court of claims awarded to the contractor for damages arising from the breach of such contract by the state, or awarded for furnishing labor or materials not contemplated by the provisions of said contract, upon filing a notice of lien as prescribed in this article, except as hereinafter in this article provided. Where no public fund has been established for the financing of a public improvement with estimated cost in excess of two hundred fifty thousand dollars, the chief financial officer of the public owner shall require the private entity for whom the public improvement is being made to post, or cause to be
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09505-02-9
A. 5471--A 2
posted, a surety bond issued by a surety duly licensed in the state of New York or [other form of undertaking] an irrevocable letter of credit, in an amount equal to the cost of the construction work guaranteeing prompt payment of moneys due to the contractor, his or her subcontractors and to all persons furnishing labor or materials to the contractor or his or her subcontractors in the prosecution of the work on the public improvement.
§ 2. 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.
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