NY State Senate Bill 2017-S4467

Senate Bill S4467

2017-2018 Legislative Session

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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Archive: Last Bill Status - In Senate Committee Finance Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to finance
Feb 15, 2017	referred to finance

co-Sponsors

2017-S4467 (ACTIVE) - Details

See Assembly Version of this Bill:: A358
Current Committee:: Senate Finance
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
Versions Introduced in Other Legislative Sessions:: 2011-2012: S6158, A8473
2013-2014: S980, A725
2015-2016: S2931, S7652, A796, A10275
2019-2020: S5498, A574
2021-2022: S1387, A494
2023-2024: S6855, A1194

2017-S4467 (ACTIVE) - Summary

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

2017-S4467 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4467

 TITLE OF BILL :

An act to amend the state finance law and the general municipal law,
in relation to requiring full payment for delivered and accepted
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 :

This legislation requires full payment for delivered and accepted
material pertaining to public work projects and prohibits retention of
any payment due and owing a material supplier for a construction
project.

 SUMMARY OF 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.

Section 4: Sets the effective date.

 JUSTIFICATION :

Currently, retainage is withheld on construction jobs to ensure that
the owner is satisfied 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.

 LEGISLATIVE HISTORY :

2016: S.1652/A.10275 - Referred to Finance.

 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.

2017-S4467 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4467
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 15, 2017
                                ___________
 
 Introduced  by  Sen. AMEDORE -- 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 and accepted materi-
   als pertaining to public work projects; and to amend the general busi-
   ness 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, ACCEPTED AND
 ARE COVERED BY A MANUFACTURER'S WARRANTY,  AND/OR  ARE  GRADED  TO  MEET
 INDUSTRY  STANDARDS,  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, ACCEPTED AND ARE COVERED BY A
 MANUFACTURER'S WARRANTY, AND/OR ARE GRADED TO MEET  INDUSTRY  STANDARDS,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD03052-01-7

 S. 4467                             2
 
 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
 material  bond both in the full amount of the contract. The public owner
 shall pay IN FULL, upon requisition from the contractor, for ALL materi-
 als  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
 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

 S. 4467                             3
 
 SHALL  PAY  IN FULL, UPON PAYMENT BY THE PUBLIC OWNER, FOR ALL MATERIALS
 PERTINENT TO THE PROJECT WHICH HAVE BEEN DELIVERED TO  AND  ACCEPTED  AT
 THE  SITE  OR OFF-SITE BY A MATERIALMAN AND ARE COVERED BY A MANUFACTUR-
 ER'S  WARRANTY,  AND/OR  ARE GRADED TO MEET INDUSTRY STANDARDS. However,
 EXCEPT IN THE CASE OF A MATERIALMAN WHO IS ALSO CONTRACTED TO INSTALL  A
 PRODUCT HE/SHE DELIVERED, 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] 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.
   § 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,  ACCEPTED  AND  ARE  COVERED BY A
 MANUFACTURER'S WARRANTY, AND/OR ARE GRADED TO MEET  INDUSTRY  STANDARDS,
 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,  ACCEPTED  AND  ARE  COVERED  BY  A
 MANUFACTURER'S  WARRANTY,  AND/OR ARE GRADED TO MEET INDUSTRY STANDARDS,
 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
 material bond both in the full amount of the contract. The public  owner
 shall pay IN FULL, upon requisition from the contractor, for ALL materi-
 als  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,

 S. 4467                             4

 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
 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

 S. 4467                             5
 
 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  AND  ACCEPTED  AT
 THE  SITE  OR OFF-SITE BY A MATERIALMAN AND ARE COVERED BY A MANUFACTUR-
 ER'S WARRANTY, AND/OR ARE GRADED TO MEET  INDUSTRY  STANDARDS.  However,
 EXCEPT  IN THE CASE OF A MATERIALMAN WHO IS ALSO CONTRACTED TO INSTALL A
 PRODUCT HE/SHE DELIVERED, 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] 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.
   § 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. 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, ACCEPTED AND ARE COVERED BY A MANUFAC-
 TURER'S WARRANTY, AND/OR GRADED TO  MEET  INDUSTRY  STANDARDS  SHALL  BE
 RETAINED BY AN OWNER, CONTRACTOR OR SUBCONTRACTOR.
   §  4.  This  act shall take effect on the thirtieth day after it shall
 have become a law and shall apply to materials delivered and accepted on
 or after such effective date.

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Senate Bill S4467

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Sponsored By

George Amedore