What's happening
This bill defines "substantial completion" in construction contracts and limits retainage to 5% of the contract sum.
Why it matters
By defining "substantial completion,". the bill clarifies when contractors are entitled to full payment, reducing disputes over final payment timing and providing clearer expectations for all parties.
Capping retainage at 5%. prevents owners and contractors from withholding excessive funds, helping subcontractors and small businesses maintain better cash flow and financial stability during and after projects.
Requires prompt release of retainage. (within 30 days of final approval), holding parties accountable and introducing an interest penalty for late payments, which incentivizes timely financial practices and reduces financial strain on contractors and subcontractors.
Applies to all new contracts,. ensuring future construction agreements are more transparent and fair, but does not retroactively alter existing agreements, allowing businesses time to adapt to the new standards.
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Who cares
Construction project owners
The bill would cap retainage at 5% of the contract sum and allow contractors to submit final invoices at substantial completion rather than after fulfilling all contractual obligations.
Construction contractors
Contractors could invoice for payment in full once owners can occupy or use the work for its intended purpose, including a project portion where the contract allows it.
Construction subcontractors
Retainage withheld by contractors or subcontractors would be capped at 5% and could not exceed the actual percentage retained by the owner.
Headline styles
Limit Construction Payment Withholding
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to consumer protection
- Referred to consumer protection
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 Delays
In Assembly Committee · Economic Development · Sponsor Michael Cusick
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
981
2019-2020 Regular Sessions
IN SENATE
January 9, 2019
Introduced by Sen. BRESLIN -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
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
S. 981 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.
Sponsor's memo
Title of bill
An act to amend the general business law, in relation to payment and retainage in construction contracts
Purpose or general idea of bill
This bill amends the general business law to provide for the timely release of retainage on private construction jobs when such job has met the requirements of "substantial completion."
Summary of specific provisions
Section 1 amends section 756 of the general business law by adding a definition for the term "substantial completion." Such "substantial completion" shall mean that when the work is sufficiently completed in accordance with the construction contract that the project owner may occupy or utilize the work for its intended use.
Section 2 amends. subdivision (2) of Section 756-a of the General Busi- ness Law stating that a contractor shall be entitled to submit a final invoice for payment upon reaching such substantial completion and removes language stating that a contractor may shall be entitled to submit a final invoice "upon the performance of all the contractor's obligation under the contract."
Section 3 amends Section 756-c of the General Business Law limiting the retainage permitted to "no more than five per centum" of the contract sum. Existing law does not state a maximum amount of retainage and leaves it to the mutual agreement of the relevant parties.
Section 4 states that the act shall take effect immediately and shall apply to contracts entered into on or after such effective date.
Justification
Currently, subcontractors who have finished their work on a private job must wait until the entire project is complete before receiving their retainage. This creates hardships for subcontractors who must finance their work in advance and sometimes wait for unreasonably long periods of time for payment. This bill creates a new definition for "substantial completion" of a construction contract and permits a contractor to issue a final invoice upon such completion. It also limits retainage to no more than 5% of the contract. This bill ensures that all parties under- stand when a project is completed for invoicing purposes as well as limiting the amount of retainage that can be withheld to a reasonable amount.
Prior legislative history
2017/2018: S.8848 Referred to Consumer Protection
Fiscal implications
None.
Effective date
This act shall take effect immediately and shall apply to all contracts entered into on or after such effective date.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.