S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9637
 
                           I N  A S S E M B L Y
 
                             January 30, 2018
                                ___________
 
 Introduced by M. of A. CUSICK -- read once and referred to the Committee
   on Economic Development
 
 AN  ACT  to  amend  the general business law, in relation to payment and
   retainage in construction contracts
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Section  756  of  the  general business law is amended by
 adding a new subdivision 7 to read as follows:
   7. "SUBSTANTIAL COMPLETION" MEANS THE STATE IN  THE  PROGRESS  OF  THE
 PROJECT  WHEN  THE  WORK  REQUIRED BY THE CONSTRUCTION CONTRACT WITH THE
 PROJECT  OWNER  IS  SUFFICIENTLY  COMPLETE  IN   ACCORDANCE   WITH   THE
 CONSTRUCTION  CONTRACT  SO  THAT THE PROJECT OWNER MAY OCCUPY OR UTILIZE
 THE WORK FOR ITS  INTENDED  USE;  PROVIDED  FURTHER,  THAT  "SUBSTANTIAL
 COMPLETION" SHALL APPLY TO THE ENTIRE PROJECT OR A PORTION OF THE ENTIRE
 PROJECT IF THE CONSTRUCTION CONTRACT WITH THE PROJECT OWNER PROVIDES FOR
 OCCUPANCY OR USE OF A PORTION OF THE PROJECT.
   §  2.  The  opening  paragraph  of  paragraph  (a) of subdivision 2 of
 section 756-a of the general business law, as amended by chapter 417  of
 the laws of 2009, is amended to read as follows:
   A  contractor  shall  be  entitled  to  invoice  the owner for interim
 payments at the end of the billing cycle. A contractor shall be entitled
 to submit a final invoice for payment in full [upon the  performance  of
 all  the  contractor's  obligation  under  the  contract]  UPON REACHING
 SUBSTANTIAL COMPLETION UNDER THE CONSTRUCTION CONTRACT.
   § 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.  By  mutual agreement of the relevant parties an
 owner may retain [a reasonable amount] NO MORE THAN FIVE PER  CENTUM  of
 the  contract  sum  as retainage. A contractor or subcontractor may also
 retain [a reasonable amount] NO MORE THAN FIVE PER CENTUM for  retainage
 [so  long  as the amount does not] AND IN NO CASE SHALL RETAINAGE 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD00510-01-7

 A. 9637                             2
 
 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.
   §  4.  This  act  shall  take  effect  immediately  and shall apply to
 contracts entered into on or after such effective date.