senate Bill S6158

Amended

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 09 / Jan / 2012
    • REFERRED TO FINANCE
  • 15 / May / 2012
    • 1ST REPORT CAL.803
  • 16 / May / 2012
    • 2ND REPORT CAL.
  • 21 / May / 2012
    • AMENDED (T) 6158A
  • 21 / May / 2012
    • ADVANCED TO THIRD READING
  • 21 / Jun / 2012
    • COMMITTED TO RULES

Summary

Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project.

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Bill Details

See Assembly Version of this Bill:
A8473
Versions:
S6158
S6158A
Legislative Cycle:
2011-2012
Current Committee:
Senate Rules
Law Section:
State Finance Law
Laws Affected:
Amd §139-f, St Fin L; amd §106-b, Gen Muni L; amd §756-c, Gen Bus L

Sponsor Memo

BILL NUMBER:S6158

TITLE OF BILL:
An act to amend the state finance law and the general municipal law, in
relation to requiring full payment for delivered materials pertaining to
public work projects; and to amend the general business law, in relation
to prohibiting the retention of any payment due and owing a material
supplier for a construction project

PURPOSE OR GENERAL IDEA OF BILL:
This bill amends the state finance and general municipal laws, in
relation to requiring full payment for delivered materials pertaining to
public works projects; and to amend the general business law, in
relation to prohibiting the retention of any payment due and owing a
material supplier for a construction project.

SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends the state finance law to clarify that materialmen are
not subject to retainage.

Section 2: Amends the general municipal law to clarify that materialmen
are not subject to retainage.

Section 3: Amends the current law to clarify that an owner, contractor,
or subcontractor may not retain any portion of any payment due to a
material supplier, except as set forth in subsection one of the law.

JUSTIFICATION:
Currently, retainage is withheld on construction jobs to ensure that the
owner is happy with the finished product. Retainage is withheld by the
owner from the contractor, who, as a result of not receiving funds from
the owner, withholds payment from the subcontractors and materialmen.
Once a material supplier has delivered its goods and has been accepted
by the contractor or subcontractor, the supplier has completed its job
and should not be held liable for subsequent work performance. This
legislation would remove materialmen from inclusion under current
retainage laws.

PRIOR LEGISISLATIVE HISTORY:
New bill.

FISCAL IMPLICATIONS:
None to the State.

EFFECTIVE DATE:
This act shall take effect on the thirtieth day after it shall become
law and shall apply to materials deliver on or after such date.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6158

                            I N  S E N A T E

                             January 9, 2012
                               ___________

Introduced  by  Sen.  LIBOUS -- read twice and ordered printed, and when
  printed to be committed to the Committee on Finance

AN ACT to amend the state finance law and the general municipal law,  in
  relation  to requiring full payment for delivered materials pertaining
  to public work projects; and to amend the  general  business  law,  in
  relation  to  prohibiting the retention of any payment due and owing a
  material supplier for a construction project

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1. Subdivisions 1 and 2 of section 139-f of the state finance
law, subdivision 1 as added by chapter 769  of  the  laws  of  1978  and
subdivision  2  as amended by section 16 of part MM of chapter 57 of the
laws of 2008, are amended to read as follows:
  1. Payment by public owners to contractors. The contractor shall peri-
odically, in accordance with the terms of the contract,  submit  to  the
public owner and/or [his] ITS agent a requisition for a progress payment
for  the  work  performed  and/or materials furnished to the date of the
requisition, less any amount previously  paid  to  the  contractor.  The
public  owner shall in accordance with the terms of the contract approve
and promptly pay the requisition for the progress payment less an amount
necessary to satisfy any claims, liens or judgments against the contrac-
tor which have not been suitably discharged and less any retained amount
as hereafter described. The public owner shall retain not more than five
per centum of each progress payment, NOT INCLUDING ANY PAYMENT FOR MATE-
RIALS PERTINENT TO  THE  PROJECT  WHICH  HAVE  BEEN  DELIVERED,  to  the
contractor except that the public owner may retain in excess of five per
centum  but  not  more than ten per centum of each progress payment, NOT
INCLUDING ANY PAYMENT FOR MATERIALS PERTINENT TO THE PROJECT WHICH  HAVE
BEEN  DELIVERED,  to  the contractor provided that there are no require-
ments by the public owner for the contractor to  provide  a  performance
bond  and  a  labor  and  material  bond  both in the full amount of the
contract. The public owner shall pay IN FULL, upon requisition from  the
contractor,  for  ALL materials pertinent to the project which have been
delivered to the site or off-site by the contractor and/or subcontractor

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD11725-01-1

S. 6158                             2

and suitably stored and secured as required by the public owner and  the
contractor [provided, the public owner may limit such payment to materi-
als  in  short and/or critical supply and materials specially fabricated
for the project each as defined in the contract]. When the work or major
portions  thereof  as  contemplated  by  the  terms  of the contract are
substantially completed, the contractor shall submit to the public owner
and/or [his] ITS agent a requisition for payment of the remaining amount
of the contract balance.  Upon receipt of such  requisition  the  public
owner  shall  approve  and  promptly  pay  the  remaining  amount of the
contract balance less two times the value of any remaining items  to  be
completed  and an amount necessary to satisfy any claims, liens or judg-
ments against the contractor which have not been suitably discharged. As
the remaining items of work are satisfactorily completed  or  corrected,
the  public owner shall promptly pay, upon receipt of a requisition, for
these remaining items less an amount necessary to  satisfy  any  claims,
liens  or  judgments against the contractor which have not been suitably
discharged. Any claims, liens and judgments referred to in this  section
shall  pertain  to the project and shall be filed in accordance with the
terms of the applicable contract and/or applicable laws.
  2. Payment by contractors to  subcontractors.  Within  seven  calendar
days of the receipt of any payment from the public owner, the contractor
shall  pay each of [his] ITS subcontractors and materialmen the proceeds
from the payment representing the value of  the  work  performed  and/or
materials furnished by the subcontractor and/or materialman and reflect-
ing  the  percentage  of  the  subcontractor's  work  completed  or  the
materialman's material supplied in the requisition approved by the owner
and based upon the actual value of the  subcontract  or  purchase  order
less  an  amount  necessary  to  satisfy  any claims, liens or judgments
against the subcontractor or materialman which have  not  been  suitably
discharged  and, WITH REGARD TO SUBCONTRACTORS, less any retained amount
as hereafter described. Failure by the contractor to pay any subcontrac-
tor or materialman within seven calendar days  of  the  receipt  of  any
payment  from  the  public  owner  shall  result in the commencement and
accrual of interest on amounts due to such subcontractor or  materialman
for the period beginning on the day immediately following the expiration
of  such  seven  calendar  day  period  and  ending on the date on which
payment is made by the contractor to such subcontractor or  materialman.
Such  interest  payment shall be the sole responsibility of the contrac-
tor, and shall be paid at the rate of interest in  effect  on  the  date
payment  is made by the contractor.  Notwithstanding any other provision
of law to the contrary, interest shall be computed at  the  rate  estab-
lished  in  paragraph  (b)  of  subdivision one of section seven hundred
fifty-six-b of the general business law. The contractor shall retain not
more than five per centum of each payment to the  subcontractor  [and/or
materialman] except that the contractor may retain in excess of five per
centum  but  not more than ten per centum of each payment to the subcon-
tractor provided that prior to entering  into  a  subcontract  with  the
contractor,  the  subcontractor  is  unable  or  unwilling  to provide a
performance bond and a labor and material bond, both in the full  amount
of  the  subcontract,  at the request of the contractor.  THE CONTRACTOR
SHALL PAY IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR  ALL  MATERIALS
PERTINENT  TO  THE  PROJECT  WHICH  HAVE  BEEN  DELIVERED TO THE SITE OR
OFF-SITE BY A MATERIALMAN. However, the contractor shall retain  nothing
from  those payments representing proceeds owed the subcontractor and/or
materialman from the public owner's payments to the contractor  for  the
remaining amounts of the contract balance as provided in subdivision one

S. 6158                             3

of  this  section.  If the contractor has failed to submit a requisition
for payment of the remaining amounts  of  the  contract  balance  within
ninety  days of substantial completion as provided in subdivision one of
this  section, then any clause in the subcontract between the contractor
and the subcontractor or materialman which states that  payment  by  the
contractor  to  such  subcontractor  or  materialman  is contingent upon
payment by the owner to the contractor shall be deemed  invalid.  Within
seven  calendar  days of the receipt of payment from the contractor, the
subcontractor and/or materialman shall pay each of [his] ITS subcontrac-
tors and materialmen in the same manner as the contractor has  paid  the
subcontractor,  including  interest  as  herein  provided above. Nothing
provided herein shall create any obligation on the part  of  the  public
owner to pay or to see to the payment of any moneys to any subcontractor
or  materialman  from  any contractor nor shall anything provided herein
serve to create any relationship in contract or  otherwise,  implied  or
expressed,  between  the  subcontractor  or  materialman  and the public
owner.
  S 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b
of the general municipal law, paragraph (a) of subdivision 1 as  amended
by  chapter  98  of  the  laws  of  1995 and subdivision 2 as amended by
section 15 of part MM of chapter 57 of the laws of 2008, are amended  to
read as follows:
  (a) The contractor shall periodically, in accordance with the terms of
the contract, submit to the public owner and/or [his] ITS agent a requi-
sition  for  a  progress payment for the work performed and/or materials
furnished to the date of the requisition less any amount previously paid
to the contractor. The public owner shall in accordance with  the  terms
of  the  contract  approve  and  promptly  pay  the  requisition for the
progress payment less an amount necessary to satisfy any  claims,  liens
or  judgments  against  the  contractor  which  have  not  been suitably
discharged and less any retained  amount  as  hereafter  described.  The
public owner shall retain not more than five per centum of each progress
payment,  NOT  INCLUDING  ANY  PAYMENT  FOR  MATERIALS  PERTINENT TO THE
PROJECT WHICH HAVE BEEN DELIVERED, to the  contractor  except  that  the
public  owner  may retain in excess of five per centum but not more than
ten per centum of each progress payment, NOT INCLUDING ANY  PAYMENT  FOR
MATERIALS  PERTINENT  TO  THE  PROJECT WHICH HAVE BEEN DELIVERED, to the
contractor provided that there are no requirements by the  public  owner
for the contractor to provide a performance bond and a labor and materi-
al  bond both in the full amount of the contract. The public owner shall
pay IN FULL, upon requisition from the  contractor,  for  ALL  materials
pertinent  to  the project which have been delivered to the site or off-
site by the contractor and/or  subcontractor  and  suitably  stored  and
secured  as  required  by the public owner and the contractor [provided,
the public owner may limit such payment to  materials  in  short  and/or
critical  supply and materials specially fabricated for the project each
as defined in the contract]. When the work or major portions thereof  as
contemplated  by  the terms of the contract are substantially completed,
the contractor shall submit to the public owner and/or [his] ITS agent a
requisition for payment of the remaining amount of the contract balance.
Upon receipt of such requisition the  public  owner  shall  approve  and
promptly pay the remaining amount of the contract balance less two times
the value of any remaining items to be completed and an amount necessary
to  satisfy  any claims, liens or judgments against the contractor which
have not been suitably discharged. As the remaining items  of  work  are
satisfactorily  completed  or corrected, the public owner shall promptly

S. 6158                             4

pay, upon receipt of a requisition,  for  these  items  less  an  amount
necessary to satisfy any claims, liens or judgments against the contrac-
tor which have not been suitably discharged. Any claims, liens and judg-
ments referred to in this section shall pertain to the project and shall
be  filed in accordance with the terms of the applicable contract and/or
applicable laws. Where the public owner is other than the  city  of  New
York,  the  term  "promptly  pay" shall mean payment within thirty days,
excluding legal holidays, of receipt  of  the  requisition  unless  such
requisition  is  not  approvable  in  accordance  with  the terms of the
contract. Notwithstanding the foregoing, where the public owner is other
than the city of New York and is a municipal corporation which  requires
an  elected  official to approve progress payments, "promptly pay" shall
mean payment  within  forty-five  days,  excluding  legal  holidays,  of
receipt  of the requisition unless such requisition is not approvable in
accordance with the terms of the contract.
  2. Payment by contractors to  subcontractors.  Within  seven  calendar
days of the receipt of any payment from the public owner, the contractor
shall  pay each of [his] ITS subcontractors and materialmen the proceeds
from the payment representing the value of  the  work  performed  and/or
materials furnished by the subcontractor and/or materialman and reflect-
ing  the  percentage  of  the  subcontractor's  work  completed  or  the
materialman's material supplied in the requisition approved by the owner
and based upon the actual value of the  subcontract  or  purchase  order
less  an  amount  necessary  to  satisfy  any claims, liens or judgments
against the subcontractor or materialman which have  not  been  suitably
discharged  and, WITH REGARD TO SUBCONTRACTORS, less any retained amount
as hereafter described. Failure by the contractor to make  any  payment,
including  any  remaining amounts of the contract balance as hereinafter
described, to any subcontractor or  materialman  within  seven  calendar
days of the receipt of any payment from the public owner shall result in
the  commencement and accrual of interest on amounts due to such subcon-
tractor or materialman for the period beginning on the  day  immediately
following the expiration of such seven calendar day period and ending on
the  date on which payment is made by the contractor to such subcontrac-
tor or materialman. Such interest shall be the  sole  responsibility  of
the  contractor,  and shall be paid at the rate of interest in effect on
the date payment is made by the contractor.  Notwithstanding  any  other
provision of law to the contrary, interest shall be computed at the rate
established in paragraph (b) of subdivision one of section seven hundred
fifty-six-b of the general business law. The contractor shall retain not
more  than  five per centum of each payment to the subcontractor [and/or
materialman] except that the contractor may retain in excess of five per
centum but not more than ten per centum of each payment to  the  subcon-
tractor  provided  that  prior  to  entering into a subcontract with the
contractor, the subcontractor  is  unable  or  unwilling  to  provide  a
performance  bond  and a labor and material bond both in the full amount
of the subcontract at the request  of  the  contractor.  THE  CONTRACTOR
SHALL  PAY  IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR ALL MATERIALS
PERTINENT TO THE PROJECT WHICH  HAVE  BEEN  DELIVERED  TO  THE  SITE  OR
OFF-SITE  BY A MATERIALMAN. However, the contractor shall retain nothing
from those payments representing proceeds owed the subcontractor  and/or
materialman  from  the public owner's payments to the contractor for the
remaining amounts of the contract balance as provided in subdivision one
of this section. If the contractor has failed to  submit  a  requisition
for  payment  of  the  remaining  amounts of the contract balance within
ninety days of substantial completion as provided in subdivision one  of

S. 6158                             5

this  section, then any clause in the subcontract between the contractor
and the subcontractor or materialman which states that  payment  by  the
contractor  to  such  subcontractor  or  materialman  is contingent upon
payment  by  the owner to the contractor shall be deemed invalid. Within
seven calendar days of the receipt of payment from the  contractor,  the
subcontractor and/or materialman shall pay each of [his] ITS subcontrac-
tors  and  materialmen in the same manner as the contractor has paid the
subcontractor, including interest as herein  provided  above.    Nothing
provided  herein  shall  create any obligation on the part of the public
owner to pay or to see to the payment of any moneys to any subcontractor
or materialman from any contractor nor shall  anything  provided  herein
serve  to  create  any relationship in contract or otherwise, implied or
expressed, between the  subcontractor  or  materialman  and  the  public
owner.
  S  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:
  S 756-c. Retention. 1. By mutual agreement of the relevant parties  an
owner may retain a reasonable amount of the contract sum as retainage. A
contractor  or  subcontractor  may  also  retain a reasonable amount for
retainage so long as the amount does not exceed  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.
  2.  NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION ONE OF THIS SECTION,
NO PORTION OF ANY PAYMENT DUE AND OWING TO A MATERIAL SUPPLIER FOR MATE-
RIALS WHICH HAVE BEEN DELIVERED SHALL BE RETAINED BY AN OWNER,  CONTRAC-
TOR OR SUBCONTRACTOR.
  S  4.  This  act shall take effect on the thirtieth day after it shall
have become a law and shall apply to materials  delivered  on  or  after
such date.

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