On November 17, 2023, Governor Kathy Hochul signed Senate Bill S.3539/A.4167, also known as the 5% Retainage Bill, into law. This bill amends the New York General Business law Sections 756-a and 756-c relating to payment and retainage in construction contracts.
The purpose of this new law is to reduce delays in the release of retainage on private construction projects that have met substantial completion requirements. The law provides that owners of private commercial construction projects can withhold retainage of no more than 5 percent of the contract sum where the value of the project equals or exceeds $150,000.
Additionally, retainage is to be released by the owner to the general contractor no later than 30 days after the final approval of the work under the construction contract. It also allows a general contractor to submit a final invoice in full upon reaching substantial completion (as such term is defined in the contract or as it is contemplated by the terms of the contract).
Failure to release retainage as required by the law will subject the owner, general contractor or subcontractor (as the case may be) to interest of 1 percent per month from the date the retention was due and owing.
This new law takes effect immediately and applies to contracts entered into on or after the effective date of November 17. Please review your construction contract forms to ensure they are in compliance with this new law.
For More Information
If you have any questions about this Alert, please contact Kenneth H. Lazaruk, Brian A. Shue, Michelle Ranello, any of the attorneys in our Construction Group or the attorney in the firm with whom you are in regular contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.