Senate Bill S37

2015-2016 Legislative Session

Provides for a reasonable amount of construction contract sum to be deposited in a separate interest bearing escrow account with a third party escrow agent

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Archive: Last Bill Status - In Senate Committee Consumer Protection 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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2015-S37 (ACTIVE) - Details

See Assembly Version of this Bill:
A10276
Current Committee:
Senate Consumer Protection
Law Section:
General Business Law
Laws Affected:
Amd ยง756-c, Gen Bus L
Versions Introduced in Other Legislative Sessions:
2009-2010: S754, A2279
2011-2012: S3180, A5023
2013-2014: S1217, A529
2017-2018: S5871, A1294
2019-2020: S7352, A488
2021-2022: S26, A771

2015-S37 (ACTIVE) - Summary

Provides for a reasonable amount of construction contract sum to be deposited in a separate interest bearing escrow account with a third party escrow agent; provides further that the owner shall be subject to the payment of interest, in addition to the escrow interest, at the rate of one percent per month and the contractor or subcontractor shall be subject to payment of interest on the amount of retainage it holds at the rate of one percent per month.

2015-S37 (ACTIVE) - Sponsor Memo

2015-S37 (ACTIVE) - Bill Text download pdf 

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

                                   37

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 7, 2015
                               ___________

Introduced  by  Sen.  DeFRANCISCO -- read twice and ordered printed, and
  when printed to be committed to the Committee on Consumer Protection

AN ACT to amend the general business law, in relation  to  retention  of
  construction contracts

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

  Section 1. 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.  By  mutual agreement of the relevant parties an
owner may retain a reasonable amount of the contract sum as  retainage[.
A]  AND FOR ANY CONSTRUCTION CONTRACTS, EXCLUDING CONSTRUCTION CONTRACTS
FINANCED BY A PUBLIC BENEFIT CORPORATION, SUCH RETAINAGE SHALL BE DEPOS-
ITED  IN  A  SEPARATE INTEREST BEARING ESCROW ACCOUNT WITH A THIRD PARTY
ESCROW AGENT. AS OF THE TIME  OF  THE  DEPOSIT  OF  THE  RETAINAGE,  THE
RETAINED  FUNDS  SHALL  BECOME  THE  SOLE  AND  SEPARATE PROPERTY OF THE
CONTRACTOR. INTEREST ON THE RETAINED FUNDS SHALL ACCRUE AT  AN  INTEREST
RATE  AT LEAST EQUAL TO THE PREVAILING INTEREST RATE PAID ON DEPOSITS BY
THE ESCROW AGENT. ALSO, A contractor or subcontractor may [also]  retain
a  reasonable amount for retainage so long as the amount does not exceed
the actual percentage [retained]  DEPOSITED  IN  ESCROW  by  the  owner.
[Retainage]  THE  ESCROWED  RETAINAGE  shall  be released by the [owner]
OWNER'S WRITTEN DIRECTION TO THE ESCROW AGENT TO  DELIVER  THE  ESCROWED
RETAINAGE  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 THE ESCROWED retainage as required by this  arti-
cle, or the contractor or subcontractor fails to release a proportionate
amount  of  retainage  to  the  relevant  parties WITHIN FIVE DAYS after
receipt of THE ESCROWED  retainage  from  the  owner,  (I)  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

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

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