§ 756-a. Obligations. It is the policy and purpose of this article to
expedite payment of all monies owed to those who perform contracting
services pursuant to construction contracts. Except as otherwise
provided in this article, the terms and conditions of a construction
contract shall supersede the provisions of this article and govern the
conduct of the parties thereto.

1. Billing cycle. The parties to a construction contract may, by
mutual agreement, establish a billing cycle for the submission of
invoices requesting payment for work performed pursuant to a
construction contract. In the absence of an agreement by the parties as
to the billing cycle, the billing cycle shall be the calendar month
within which the work is performed.

2. Invoices. (a) 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 reaching
substantial completion, as such term is defined in the contract or as it
is contemplated by the terms of the contract.

(i) Upon delivery of an invoice and all contractually required
documentation, an owner shall approve or disapprove all or a portion of
such invoice within twelve business days. Owner approval of invoices
shall not be unreasonably withheld nor shall an owner, in bad faith
disapprove all or a portion of an invoice. If an owner declines to
approve an invoice or a portion thereof, it must prepare and issue a
written statement describing those items in the invoice that are not
approved. An owner may decline to approve an invoice or portion of an
invoice for:

(1) Unsatisfactory or disputed job progress;

(2) Defective construction work or material not remedied;

(3) Disputed work materials;

(4) Failure to comply with other material provisions of the
construction contract;

(5) Failure of the contractor to make timely payments for labor
including collectively bargained fringe benefit contributions, payroll
taxes and insurance, equipment and materials, damage to the owner, or
reasonable evidence that the construction contract cannot be completed
for the unpaid balance of the construction contract sum; or

(6) Failure of the owner's architect to certify payment for any or all
of the reasons set forth in this section so long as the reasons are
included in the owner's written statement of disapproval.

(ii) Upon delivery of an invoice and all contractually required
documentation, a contractor or subcontractor shall approve or disapprove
all or a portion of such invoice within twelve business days. Contractor
and subcontractor approval of invoices shall not be unreasonably
withheld nor shall a contractor or subcontractor, in bad faith,
disapprove all or a portion of an invoice. Nothing in this section shall
prohibit the contractor or subcontractor, at the time of application to
the owner or contractor, from withholding such application to the owner
or contractor for payment to the subcontractor or material supplier for:

(1) Unsatisfactory or disputed job progress;

(2) Defective construction work or material not remedied;

(3) Disputed work;

(4) Failure to comply with other material provisions of the
construction contract; or

(5) Failure of the subcontractor to make timely payments for labor
including collectively bargained fringe benefit contributions; payroll
taxes and insurance, equipment and materials, damage to contractor or
another subcontractor or material supplier, or reasonable evidence that
the subcontract cannot be completed for the unpaid balance of the
subcontract sum.

(b) Nothing in this subdivision shall authorize the withholding of an
application to the owner or contractor for the payment to a
subcontractor or material supplier when due to a delay in job progress
by the owner, contractor or another subcontractor or material supplier
other than the applicant or applicant's subcontractor or material
supplier.

3. Payment. (a) The owner's payment of a contractor's interim and
final invoices shall be made on the basis of a duly approved invoice of
work performed and the material supplied during the billing cycle.

(i) Unless the provisions of this article provide otherwise, the owner
shall pay the contractor strictly in accordance with the terms of the
construction contract.

(ii) Payment of an interim or final invoice shall be due from the
owner not later than thirty days after approval of the invoice.

(iii) If payment by the owner is contingent upon lender approval,
payment of a contractor's interim or final invoice or the amount of loan
proceeds disbursed by the lender for payment of the contractor's interim
or final invoice shall be due from the owner seven days after receipt by
the owner of good funds except where the provisions of section seven
hundred fifty-six-d of this article applies.

(iv) An owner may withhold from an interim payment only an amount that
is sufficient to pay the costs and expenses the owner reasonably expects
to incur in order to cure the defect or correct any items set forth in
writing pursuant to subparagraph (i) of paragraph (a) of subdivision two
of this section, or in the alternative, to withhold an amount not to
exceed the line item amount appearing in the agreed schedule of values
together with any change orders, additions and/or deletions, if such
schedule has been previously submitted, and/or an amount sufficient to
cover liquidated damages as established in an agreed upon schedule in
the construction contract.

(b) The contractor or subcontractor's payment of subcontractor or
material supplier's interim or final invoice shall be made on the basis
of a duly approved invoice of the work performed and materials supplied
during the billing cycle.

(i) Unless the provisions of this article provide otherwise, the
contractor or subcontractor shall pay the subcontractor strictly in
accordance with the terms of the construction contract. Performance by a
subcontractor in accordance with the provisions of its contract shall
entitle it to payment from the party with which it contracts.
Notwithstanding this article, where a contractor enters into a
construction contract with a subcontractor as agent for a disclosed
owner, the payment obligation shall flow directly from the disclosed
owner as principal to the subcontractor and through the agent.

(ii) When a subcontractor has performed in accordance with the
provisions of its construction contract, the contractor shall pay to the
subcontractor, and each subcontractor shall in turn pay to its
subcontractors, the full or proportionate amount of funds received from
the owner for each subcontractor's work and materials based on work or
services provided under the construction contract, seven days after
receipt of good funds for each interim or final payment, provided all
contractually required documentation and waivers are received.

(iii) A contractor or subcontractor may withhold amounts received from
an owner in connection with an interim payment due to a subcontractor or
material supplier only such sums that are sufficient to pay the direct
expenses as are reasonable to correct deficiencies identified pursuant
to subparagraph (ii) of paragraph (a) of subdivision two of this
section, or in the alternative, to withhold an amount not to exceed the
line item amount appearing in the agreed schedule of values, together
with any change order, additions or deletions, if such schedule has been
previously submitted.

(iv) If a contractor, after submitting an invoice to an owner under a
construction contract, but before making a payment to a subcontractor or
material supplier for the subcontractor's or material supplier's
performance covered by such invoice, discovers that all or a portion of
the payment otherwise due to the subcontractor or material supplier is
subject to withholding from the subcontractor or material supplier in
accordance with the construction contract and the conditions set forth
in subparagraph (ii) of paragraph (a) of subdivision two of this
section, then the contractor shall:

(1) As soon as practicable upon ascertaining the cause giving rise to
a withholding, but prior to the due date for a subcontractor or material
supplier payment, furnish to the subcontractor or material supplier and
the owner written notice of withholding specifying conditions for
withholding payment and identifying the amount to be withheld;

(2) Reduce the subcontractor's or material supplier's interim payment
by an amount not to exceed the amount specified in the notice of
withholding; and

(3) Pay the subcontractor or material supplier amounts withheld within
seven days after correction of the identified subcontractor or material
supplier performance deficiency and receipt of all required
documentation and waivers, unless the funds therefor must be obtained
from the owner's next interim payment due to a reduction in the
contractor's billing directly resulting from the subcontractor's or
material supplier's performance deficiency identified in the notice of
withholding.

(c) A written notice of any withholding under this subdivision shall
be issued to a subcontractor or material supplier specifying:

(i) The amount to be withheld;

(ii) The specific causes for withholding under the terms of the
construction contract and pursuant to this subdivision;

(iii) The remedial actions necessary to be taken by the subcontractor
or material supplier in order to receive payments of the amounts
withheld; and

(iv) The documentation and waivers required.

4. Notice. A contractor or subcontractor shall disclose to a
subcontractor, at the time the construction subcontract is entered into,
the due date for receipt of payments to the contractor or subcontractor
from the owner or the contractor as the case may be. If a contractor or
subcontractor fails to accurately disclose the due date to a
subcontractor, the contractor or subcontractor shall be obligated to pay
the subcontractor as though the due dates established in paragraph (a)
of subdivision three of this section were met by the owner. In addition,
upon written request of a subcontractor, the owner shall provide notice
to such subcontractor within five days of making any interim or final
payment to the contractor. The subcontractor's request shall remain in
effect for the duration of the subcontractor's work on the project.