BILL NUMBER: S5655

SPONSOR: RYAN C
 
TITLE OF BILL:

An act to amend the general business law, in relation to void provisions
in construction contracts

 
PURPOSE OR GENERAL IDEA OF BILL:

To ensure compliance with the statutory requirement of a maximum five
percent retainage in construction contracts.

 
SUMMARY OF PROVISIONS:

Section 1: Amends section 757 of the general business law to add
contract language requiring retainage in excess of five percent of a
contract sum as a void provision in a construction contract.

§ 2. Provides an immediate effective date.

 
              

JUSTIFICATION:

Chapter 657 of the Laws of 2023 brought private construction contracts
in line with state construction contracts by limiting the amount of
retainage that contractors and subcontractors can hold from other
subcontractors to a maximum of five percent. While it was the clear
intent of the legislature to ensure that qualifying projects capped
retainage at five percent, there are still many construction projects in
which general contractors offer retainage at 10% or higher. By updating
the general business law to render any clause requiring retainage in
excess of five percent as void, we will ensure compliance with the spir-
it of the law.

 
PRIOR LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to contracts
entered into on or after such effective date.