S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    981
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                              January 9, 2019
                                ___________
 
 Introduced  by  Sen. BRESLIN -- 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  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD00021-01-9

 S. 981                              2
 
 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.
   § 4. This act  shall  take  effect  immediately  and  shall  apply  to
 contracts entered into on or after such effective date.