S T A T E O F N E W Y O R K
________________________________________________________________________
S. 1974 A. 1660
2013-2014 Regular Sessions
S E N A T E - A S S E M B L Y
(PREFILED)
January 9, 2013
___________
IN SENATE -- Introduced by Sen. DeFRANCISCO -- read twice and ordered
printed, and when printed to be committed to the Committee on Finance
IN ASSEMBLY -- Introduced by M. of A. CUSICK, GABRYSZAK -- Multi-Spon-
sored by -- M. of A. ROBINSON -- read once and referred to the Commit-
tee 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:
Section 1. Subdivision 2 of section 139-f of the state finance law, as
amended by section 16 of part MM of chapter 57 of the laws of 2008, is
amended to read as follows:
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 subcontractors and materialmen the proceeds from
the payment representing the value of the work performed and/or materi-
als furnished by the subcontractor and/or materialman and reflecting 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
less any retained amount as hereafter described. Failure by the contrac-
tor to pay 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 subcontrac-
tor 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-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04997-01-3
S. 1974 2 A. 1660
tor or materialman. Such interest payment shall be the sole responsibil-
ity 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 subcontractor provided that prior to entering into a
subcontract with the contractor, the subcontractor is unable or unwill-
ing 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.
However, the contractor shall retain nothing from those payments repres-
enting 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 substan-
tial 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 subcontractors 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. NOTWITHSTANDING ANY
OTHER PROVISION OF THIS SECTION OR OTHER LAW, ANY RETAINAGE HELD BY A
PUBLIC OWNER OR CONTRACTOR REPRESENTING RETAINAGE FOR A SUBCONTRACTOR'S
WORK SHALL BE RELEASED, LESS AN AMOUNT NECESSARY TO SATISFY ANY CLAIMS,
LIENS OR JUDGMENTS AGAINST THE SUBCONTRACTOR OR MATERIALMAN WHICH HAVE
NOT BEEN SUITABLY DISCHARGED AND LESS AN AMOUNT NECESSARY TO SATISFY ANY
CHARGES FOR UNFINISHED PUNCH LIST ITEMS, NO LATER THAN SIXTY DAYS FROM
THE COMPLETION AND ACCEPTANCE BY THE PUBLIC OWNER OF THE SUBCONTRACTOR'S
WORK.
S 2. Subdivision 2 of section 106-b of the general municipal law, as
amended by section 15 of part MM of chapter 57 of the laws of 2008, is
amended to read as follows:
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 subcontractors and materialmen the proceeds from
the payment representing the value of the work performed and/or materi-
als furnished by the subcontractor and/or materialman and reflecting 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
less any retained amount as hereafter described. Failure by the contrac-
tor to make any payment, including any remaining amounts of the contract
S. 1974 3 A. 1660
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 subcontractor or materialman for the period begin-
ning 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 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 contrac-
tor. Notwithstanding any other provision of law to the contrary, inter-
est shall be computed at the rate established in paragraph (b) of subdi-
vision 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 contrac-
tor may retain in excess of five per centum but not more than ten per
centum of each payment to the subcontractor 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 mate-
rial bond both in the full amount of the subcontract at the request of
the contractor. 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 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 subcontractors
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. NOTWITHSTANDING ANY OTHER PROVISION OF THIS SECTION OR OTHER
LAW, ANY RETAINAGE HELD BY A PUBLIC OWNER OR CONTRACTOR REPRESENTING
RETAINAGE FOR A SUBCONTRACTOR'S WORK SHALL BE RELEASED, LESS AN AMOUNT
NECESSARY TO SATISFY ANY CLAIMS, LIENS OR JUDGMENTS AGAINST THE SUBCON-
TRACTOR OR MATERIALMAN WHICH HAVE NOT BEEN SUITABLY DISCHARGED AND LESS
AN AMOUNT NECESSARY TO SATISFY ANY CHARGES FOR UNFINISHED PUNCH LIST
ITEMS, NO LATER THAN SIXTY DAYS FROM THE COMPLETION AND ACCEPTANCE BY
THE PUBLIC OWNER OF THE SUBCONTRACTOR'S WORK.
S 3. This act shall take effect immediately and shall apply to all
contracts entered into on or after such effective date.