STATE OF NEW YORK
________________________________________________________________________
5429
2019-2020 Regular Sessions
IN ASSEMBLY
February 12, 2019
___________
Introduced by M. of A. CUSICK, PEOPLES-STOKES, COLTON, BICHOTTE, SANTA-
BARBARA, D'URSO, MORINELLO -- read once and referred to the Committee
on Governmental Operations
AN ACT to amend the state finance law and the general municipal law, in
relation to release of subcontractor's retainage
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision 2 of section 139-f of the state finance law, as
2 amended by section 16 of part MM of chapter 57 of the laws of 2008, is
3 amended to read as follows:
4 2. Payment by contractors to subcontractors. Within seven calendar
5 days of the receipt of any payment from the public owner, the contractor
6 shall pay each of his subcontractors and materialmen the proceeds from
7 the payment representing the value of the work performed and/or materi-
8 als furnished by the subcontractor and/or materialman and reflecting the
9 percentage of the subcontractor's work completed or the materialman's
10 material supplied in the requisition approved by the owner and based
11 upon the actual value of the subcontract or purchase order less an
12 amount necessary to satisfy any claims, liens or judgments against the
13 subcontractor or materialman which have not been suitably discharged and
14 less any retained amount as hereafter described. Failure by the contrac-
15 tor to pay any subcontractor or materialman within seven calendar days
16 of the receipt of any payment from the public owner shall result in the
17 commencement and accrual of interest on amounts due to such subcontrac-
18 tor or materialman for the period beginning on the day immediately
19 following the expiration of such seven calendar day period and ending on
20 the date on which payment is made by the contractor to such subcontrac-
21 tor or materialman. Such interest payment shall be the sole responsibil-
22 ity of the contractor, and shall be paid at the rate of interest in
23 effect on the date payment is made by the contractor. Notwithstanding
24 any other provision of law to the contrary, interest shall be computed
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08836-01-9
A. 5429 2
1 at the rate established in paragraph (b) of subdivision one of section
2 seven hundred fifty-six-b of the general business law. The contractor
3 shall retain not more than five per centum of each payment to the
4 subcontractor and/or materialman except that the contractor may retain
5 in excess of five per centum but not more than ten per centum of each
6 payment to the subcontractor provided that prior to entering into a
7 subcontract with the contractor, the subcontractor is unable or unwill-
8 ing to provide a performance bond and a labor and material bond, both in
9 the full amount of the subcontract, at the request of the contractor.
10 However, the contractor shall retain nothing from those payments repres-
11 enting proceeds owed the subcontractor and/or materialman from the
12 public owner's payments to the contractor for the remaining amounts of
13 the contract balance as provided in subdivision one of this section. If
14 the contractor has failed to submit a requisition for payment of the
15 remaining amounts of the contract balance within ninety days of substan-
16 tial completion as provided in subdivision one of this section, then any
17 clause in the subcontract between the contractor and the subcontractor
18 or materialman which states that payment by the contractor to such
19 subcontractor or materialman is contingent upon payment by the owner to
20 the contractor shall be deemed invalid. Within seven calendar days of
21 the receipt of payment from the contractor, the subcontractor and/or
22 materialman shall pay each of his subcontractors and materialmen in the
23 same manner as the contractor has paid the subcontractor, including
24 interest as herein provided above. Nothing provided herein shall create
25 any obligation on the part of the public owner to pay or to see to the
26 payment of any moneys to any subcontractor or materialman from any
27 contractor nor shall anything provided herein serve to create any
28 relationship in contract or otherwise, implied or expressed, between the
29 subcontractor or materialman and the public owner. Notwithstanding any
30 other provision of this section or other law, any retainage held by a
31 public owner or contractor representing retainage for a subcontractor's
32 work shall be released, less two times the value of any remaining items
33 to be completed by the subcontractor and an amount necessary to satisfy
34 any claims, liens or judgments against the subcontractor or materialman
35 which have not been suitably discharged no later than sixty days from
36 the completion and acceptance by the public owner of the subcontractor's
37 work.
38 § 2. Subdivision 2 of section 106-b of the general municipal law, as
39 amended by section 15 of part MM of chapter 57 of the laws of 2008, is
40 amended to read as follows:
41 2. Payment by contractors to subcontractors. Within seven calendar
42 days of the receipt of any payment from the public owner, the contractor
43 shall pay each of his subcontractors and materialmen the proceeds from
44 the payment representing the value of the work performed and/or materi-
45 als furnished by the subcontractor and/or materialman and reflecting the
46 percentage of the subcontractor's work completed or the materialman's
47 material supplied in the requisition approved by the owner and based
48 upon the actual value of the subcontract or purchase order less an
49 amount necessary to satisfy any claims, liens or judgments against the
50 subcontractor or materialman which have not been suitably discharged and
51 less any retained amount as hereafter described. Failure by the contrac-
52 tor to make any payment, including any remaining amounts of the contract
53 balance as hereinafter described, to any subcontractor or materialman
54 within seven calendar days of the receipt of any payment from the public
55 owner shall result in the commencement and accrual of interest on
56 amounts due to such subcontractor or materialman for the period begin-
A. 5429 3
1 ning on the day immediately following the expiration of such seven
2 calendar day period and ending on the date on which payment is made by
3 the contractor to such subcontractor or materialman. Such interest shall
4 be the sole responsibility of the contractor, and shall be paid at the
5 rate of interest in effect on the date payment is made by the contrac-
6 tor. Notwithstanding any other provision of law to the contrary, inter-
7 est shall be computed at the rate established in paragraph (b) of subdi-
8 vision one of section seven hundred fifty-six-b of the general business
9 law. The contractor shall retain not more than five per centum of each
10 payment to the subcontractor and/or materialman except that the contrac-
11 tor may retain in excess of five per centum but not more than ten per
12 centum of each payment to the subcontractor provided that prior to
13 entering into a subcontract with the contractor, the subcontractor is
14 unable or unwilling to provide a performance bond and a labor and mate-
15 rial bond both in the full amount of the subcontract at the request of
16 the contractor. However, the contractor shall retain nothing from those
17 payments representing proceeds owed the subcontractor and/or materialman
18 from the public owner's payments to the contractor for the remaining
19 amounts of the contract balance as provided in subdivision one of this
20 section. If the contractor has failed to submit a requisition for
21 payment of the remaining amounts of the contract balance within ninety
22 days of substantial completion as provided in subdivision one of this
23 section, then any clause in the subcontract between the contractor and
24 the subcontractor or materialman which states that payment by the
25 contractor to such subcontractor or materialman is contingent upon
26 payment by the owner to the contractor shall be deemed invalid. Within
27 seven calendar days of the receipt of payment from the contractor, the
28 subcontractor and/or materialman shall pay each of his subcontractors
29 and materialmen in the same manner as the contractor has paid the
30 subcontractor, including interest as herein provided above. Nothing
31 provided herein shall create any obligation on the part of the public
32 owner to pay or to see to the payment of any moneys to any subcontractor
33 or materialman from any contractor nor shall anything provided herein
34 serve to create any relationship in contract or otherwise, implied or
35 expressed, between the subcontractor or materialman and the public
36 owner. Notwithstanding any other provision of this section or other
37 law, any retainage held by a public owner or contractor representing
38 retainage for a subcontractor's work shall be released, less two times
39 the value of any remaining items to be completed by the subcontractor
40 and an amount necessary to satisfy any claims, liens or judgments
41 against the subcontractor or materialman which have not been suitably
42 discharged no later than sixty days from the completion and acceptance
43 by the public owner of the subcontractor's work.
44 § 3. This act shall take effect immediately and shall apply to all
45 contracts entered into on or after such effective date.