NY State Senate Bill 2015-S7652

Senate Bill S7652

2015-2016 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

download bill text pdf

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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
May 12, 2016	referred to finance

2015-S7652 (ACTIVE) - Details

See Assembly Version of this Bill:: A10275
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
2017-2018: S4467, A358
2019-2020: S5498, A574
2021-2022: S1387, A494
2023-2024: S6855, A1194

2015-S7652 (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.

2015-S7652 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S7652

 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 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 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 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.

 LEGISLATIVE HISTORY :

This is a 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.

2015-S7652 (ACTIVE) - Bill Text download pdf

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

                                  7652

                            I N  S E N A T E

                              May 12, 2016
                               ___________

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,
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

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

                                                           LBD02317-01-5

S. 7652                             2

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
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-

S. 7652                             3

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.
  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,  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,
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

S. 7652                             4

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
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. 7652                             5

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.
  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, 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.
  S 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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