Assembly Bill A488

2019-2020 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 Assembly 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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2019-A488 (ACTIVE) - Details

See Senate Version of this Bill:
S7352
Current Committee:
Assembly Economic Development
Law Section:
General Business Law
Laws Affected:
Amd §756-c, Gen Bus L
Versions Introduced in Other Legislative Sessions:
2009-2010: A2279, S754
2011-2012: A5023, S3180
2013-2014: A529, S1217
2015-2016: A10276, S37
2017-2018: A1294, S5871
2021-2022: A771, S26

2019-A488 (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.

2019-A488 (ACTIVE) - Bill Text download pdf 

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    488
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                (PREFILED)
 
                              January 9, 2019
                                ___________
 
 Introduced  by  M.  of  A.  BRAUNSTEIN  -- read once and referred to the
   Committee on Economic Development
 
 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:
   §  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

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