A 2212: Prohibits the retention of any amount of payment due and owing for materials delivered and accepted for a public or private construction project.

  
  STATE OF NEW YORK ________________________________________________________________________ 2212 2025-2026 Regular Sessions  IN ASSEMBLY January 15, 2025 ___________ Introduced by M. of A. BRAUNSTEIN, WOERNER, STECK, PAULIN, BRABENEC, STIRPE -- Multi-Sponsored by -- M. of A. TAGUE -- read once and referred to the Committee on Governmental Operations AN ACT to amend the state finance law and the general municipal law, in relation to requiring full payment for delivered and accepted materi- als pertaining to public work projects; and to amend the general busi- ness law, in relation to prohibiting the retention of any payment due and owing a material supplier for a construction project The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivisions 1 and 2 of section 139-f of the state finance 2 law, subdivision 1 as amended by chapter 128 of the laws of 2021 and 3 subdivision 2 as amended by section 16 of part MM of chapter 57 of the 4 laws of 2008, are amended to read as follows: 5 1. Payment by public owners to contractors. The contractor shall peri- 6 odically, in accordance with the terms of the contract, submit to the 7 public owner and/or [his] its agent a requisition for a progress payment 8 for the work performed and/or materials furnished to the date of the 9 requisition, less any amount previously paid to the contractor. The 10 public owner shall in accordance with the terms of the contract approve 11 and promptly pay the requisition for the progress payment less an amount 12 necessary to satisfy any claims, liens or judgments against the contrac- 13 tor which have not been suitably discharged and less any retained amount 14 as hereafter described. The public owner shall retain not more than five 15 per centum of each progress payment, not including any payment for mate- 16 rials pertinent to the project which have been delivered, accepted and 17 are covered by a manufacturer's warranty, and/or are graded to meet 18 industry standards, to the contractor except that the public owner may 19 retain in excess of five per centum but not more than ten per centum of 20 each progress payment, not including any payment for materials pertinent 21 to the project which have been delivered, accepted and are covered by a EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD04003-01-5 
 A. 2212 2 1 manufacturer's warranty, and/or are graded to meet industry standards, 2 to the contractor provided that there are no requirements by the public 3 owner for the contractor to provide a performance bond and a labor and 4 material bond both in the full amount of the contract. The public owner 5 shall pay in full, upon requisition from the contractor, for all materi- 6 als pertinent to the project which have been delivered to the site or 7 off-site by the contractor and/or subcontractor and suitably stored and 8 secured as required by the public owner and the contractor [provided, 9 the public owner may limit such payment to materials in short and/or 10 critical supply and materials specially fabricated for the project each 11 as defined in the contract]. When the work or major portions thereof as 12 contemplated by the terms of the contract are substantially completed, 13 the contractor shall submit to the public owner and/or [his] its agent a 14 requisition for payment of the remaining amount of the contract balance. 15 Upon receipt of such requisition the public owner shall approve and 16 promptly pay the remaining amount of the contract balance less two times 17 the value of any remaining items to be completed and an amount necessary 18 to satisfy any claims, liens or judgments against the contractor which 19 have not been suitably discharged. As the remaining items of work are 20 satisfactorily completed or corrected, the public owner shall promptly 21 pay, upon receipt of a requisition, for these remaining items less an 22 amount necessary to satisfy any claims, liens or judgments against the 23 contractor which have not been suitably discharged. Any claims, liens 24 and judgments referred to in this section shall pertain to the project 25 and shall be filed in accordance with the terms of the applicable 26 contract and/or applicable laws. 27 2. Payment by contractors to subcontractors. Within seven calendar 28 days of the receipt of any payment from the public owner, the contractor 29 shall pay each of [his] its subcontractors and materialmen the proceeds 30 from the payment representing the value of the work performed and/or 31 materials furnished by the subcontractor and/or materialman and reflect- 32 ing the percentage of the subcontractor's work completed or the 33 materialman's material supplied in the requisition approved by the owner 34 and based upon the actual value of the subcontract or purchase order 35 less an amount necessary to satisfy any claims, liens or judgments 36 against the subcontractor or materialman which have not been suitably 37 discharged and, with regard to subcontractors, less any retained amount 38 as hereafter described. Failure by the contractor to pay any subcontrac- 39 tor or materialman within seven calendar days of the receipt of any 40 payment from the public owner shall result in the commencement and 41 accrual of interest on amounts due to such subcontractor or materialman 42 for the period beginning on the day immediately following the expiration 43 of such seven calendar day period and ending on the date on which 44 payment is made by the contractor to such subcontractor or materialman. 45 Such interest payment shall be the sole responsibility of the contrac- 46 tor, and shall be paid at the rate of interest in effect on the date 47 payment is made by the contractor. Notwithstanding any other provision 48 of law to the contrary, interest shall be computed at the rate estab- 49 lished in paragraph (b) of subdivision one of section seven hundred 50 fifty-six-b of the general business law. The contractor shall retain not 51 more than five per centum of each payment to the subcontractor [and/or 52 materialman] except that the contractor may retain in excess of five per 53 centum but not more than ten per centum of each payment to the subcon- 54 tractor provided that prior to entering into a subcontract with the 55 contractor, the subcontractor is unable or unwilling to provide a 56 performance bond and a labor and material bond, both in the full amount 
 A. 2212 3 1 of the subcontract, at the request of the contractor. The contractor 2 shall pay in full, upon payment by the public owner, for all materials 3 pertinent to the project which have been delivered to and accepted at 4 the site or off-site by a materialman and are covered by a manufactur- 5 er's warranty, and/or are graded to meet industry standards. However, 6 except in the case of a materialman who is also contracted to install a 7 product such materialman delivered, the contractor shall retain nothing 8 from those payments representing proceeds owed the subcontractor and/or 9 materialman from the public owner's payments to the contractor for the 10 remaining amounts of the contract balance as provided in subdivision one 11 of this section. If the contractor has failed to submit a requisition 12 for payment of the remaining amounts of the contract balance within 13 ninety days of substantial completion as provided in subdivision one of 14 this section, then any clause in the subcontract between the contractor 15 and the subcontractor or materialman which states that payment by the 16 contractor to such subcontractor or materialman is contingent upon 17 payment by the owner to the contractor shall be deemed invalid. Within 18 seven calendar days of the receipt of payment from the contractor, the 19 subcontractor and/or materialman shall pay each of [his] its subcontrac- 20 tors and materialmen in the same manner as the contractor has paid the 21 subcontractor, including interest as herein provided above. Nothing 22 provided herein shall create any obligation on the part of the public 23 owner to pay or to see to the payment of any moneys to any subcontractor 24 or materialman from any contractor nor shall anything provided herein 25 serve to create any relationship in contract or otherwise, implied or 26 expressed, between the subcontractor or materialman and the public 27 owner. 28 § 2. Paragraph (a) of subdivision 1 and subdivision 2 of section 106-b 29 of the general municipal law, paragraph (a) of subdivision 1 as amended 30 by chapter 128 of the laws of 2021 and subdivision 2 as amended by 31 section 15 of part MM of chapter 57 of the laws of 2008, are amended to 32 read as follows: 33 (a) The contractor shall periodically, in accordance with the terms of 34 the contract, submit to the public owner and/or [his] its agent a requi- 35 sition for a progress payment for the work performed and/or materials 36 furnished to the date of the requisition less any amount previously paid 37 to the contractor. The public owner shall in accordance with the terms 38 of the contract approve and promptly pay the requisition for the 39 progress payment less an amount necessary to satisfy any claims, liens 40 or judgments against the contractor which have not been suitably 41 discharged and less any retained amount as hereafter described. The 42 public owner shall retain not more than five per centum of each progress 43 payment, not including any payment for materials pertinent to the 44 project which have been delivered, accepted and are covered by a 45 manufacturer's warranty, and/or are graded to meet industry standards, 46 to the contractor except that the public owner may retain in excess of 47 five per centum but not more than ten per centum of each progress 48 payment, not including any payment for materials pertinent to the 49 project which have been delivered, accepted and are covered by a 50 manufacturer's warranty, and/or are graded to meet industry standards, 51 to the contractor provided that there are no requirements by the public 52 owner for the contractor to provide a performance bond and a labor and 53 material bond both in the full amount of the contract. The public owner 54 shall pay in full, upon requisition from the contractor, for all materi- 55 als pertinent to the project which have been delivered to the site or 56 off-site by the contractor and/or subcontractor and suitably stored and 
 A. 2212 4 1 secured as required by the public owner and the contractor [provided, 2 the public owner may limit such payment to materials in short and/or 3 critical supply and materials specially fabricated for the project each 4 as defined in the contract]. When the work or major portions thereof as 5 contemplated by the terms of the contract are substantially completed, 6 the contractor shall submit to the public owner and/or [his] its agent a 7 requisition for payment of the remaining amount of the contract balance. 8 Upon receipt of such requisition the public owner shall approve and 9 promptly pay the remaining amount of the contract balance less two times 10 the value of any remaining items to be completed and an amount necessary 11 to satisfy any claims, liens or judgments against the contractor which 12 have not been suitably discharged. As the remaining items of work are 13 satisfactorily completed or corrected, the public owner shall promptly 14 pay, upon receipt of a requisition, for these items less an amount 15 necessary to satisfy any claims, liens or judgments against the contrac- 16 tor which have not been suitably discharged. Any claims, liens and judg- 17 ments referred to in this section shall pertain to the project and shall 18 be filed in accordance with the terms of the applicable contract and/or 19 applicable laws. Where the public owner is other than the city of New 20 York, the term "promptly pay" shall mean payment within thirty days, 21 excluding legal holidays, of receipt of the requisition unless such 22 requisition is not approvable in accordance with the terms of the 23 contract. Notwithstanding the foregoing, where the public owner is other 24 than the city of New York and is a municipal corporation which requires 25 an elected official to approve progress payments, "promptly pay" shall 26 mean payment within forty-five days, excluding legal holidays, of 27 receipt of the requisition unless such requisition is not approvable in 28 accordance with the terms of the contract. 29 2. Payment by contractors to subcontractors. Within seven calendar 30 days of the receipt of any payment from the public owner, the contractor 31 shall pay each of [his] its subcontractors and materialmen the proceeds 32 from the payment representing the value of the work performed and/or 33 materials furnished by the subcontractor and/or materialman and reflect- 34 ing the percentage of the subcontractor's work completed or the 35 materialman's material supplied in the requisition approved by the owner 36 and based upon the actual value of the subcontract or purchase order 37 less an amount necessary to satisfy any claims, liens or judgments 38 against the subcontractor or materialman which have not been suitably 39 discharged and, with regard to subcontractors, less any retained amount 40 as hereafter described. Failure by the contractor to make any payment, 41 including any remaining amounts of the contract balance as hereinafter 42 described, to any subcontractor or materialman within seven calendar 43 days of the receipt of any payment from the public owner shall result in 44 the commencement and accrual of interest on amounts due to such subcon- 45 tractor or materialman for the period beginning on the day immediately 46 following the expiration of such seven calendar day period and ending on 47 the date on which payment is made by the contractor to such subcontrac- 48 tor or materialman. Such interest shall be the sole responsibility of 49 the contractor, and shall be paid at the rate of interest in effect on 50 the date payment is made by the contractor. Notwithstanding any other 51 provision of law to the contrary, interest shall be computed at the rate 52 established in paragraph (b) of subdivision one of section seven hundred 53 fifty-six-b of the general business law. The contractor shall retain not 54 more than five per centum of each payment to the subcontractor [and/or 55 materialman] except that the contractor may retain in excess of five per 56 centum but not more than ten per centum of each payment to the subcon- 
 A. 2212 5 1 tractor provided that prior to entering into a subcontract with the 2 contractor, the subcontractor is unable or unwilling to provide a 3 performance bond and a labor and material bond both in the full amount 4 of the subcontract at the request of the contractor. The contractor 5 shall pay in full, upon payment by the public owner, for all materials 6 pertinent to the project which have been delivered to and accepted at 7 the site or off-site by a materialman and are covered by a manufactur- 8 er's warranty, and/or are graded to meet industry standards. However, 9 except in the case of a materialman who is also contracted to install a 10 product such materialman delivered, the contractor shall retain nothing 11 from those payments representing proceeds owed the subcontractor and/or 12 materialman from the public owner's payments to the contractor for the 13 remaining amounts of the contract balance as provided in subdivision one 14 of this section. If the contractor has failed to submit a requisition 15 for payment of the remaining amounts of the contract balance within 16 ninety days of substantial completion as provided in subdivision one of 17 this section, then any clause in the subcontract between the contractor 18 and the subcontractor or materialman which states that payment by the 19 contractor to such subcontractor or materialman is contingent upon 20 payment by the owner to the contractor shall be deemed invalid. Within 21 seven calendar days of the receipt of payment from the contractor, the 22 subcontractor and/or materialman shall pay each of [his] its subcontrac- 23 tors and materialmen in the same manner as the contractor has paid the 24 subcontractor, including interest as herein provided above. Nothing 25 provided herein shall create any obligation on the part of the public 26 owner to pay or to see to the payment of any moneys to any subcontractor 27 or materialman from any contractor nor shall anything provided herein 28 serve to create any relationship in contract or otherwise, implied or 29 expressed, between the subcontractor or materialman and the public 30 owner. 31 § 3. Section 756-c of the general business law, as amended by chapter 32 657 of the laws of 2023, is amended to read as follows: 33 § 756-c. Retention. 1. By mutual agreement of the relevant parties an 34 owner may retain no more than five per centum of the contract sum as 35 retainage. A contractor or subcontractor may also retain no more than 36 five per centum for retainage and in no case shall retainage exceed the 37 actual percentage retained by the owner. Retainage shall be released by 38 the owner to the contractor no later than thirty days after the final 39 approval of the work under a construction contract. In the event that an 40 owner fails to release retainage as required by this article, or the 41 contractor or subcontractor fails to release a proportionate amount of 42 retainage to the relevant parties after receipt of retainage from the 43 owner, the owner, contractor, or subcontractor, as the case may be, 44 shall be subject to the payment of interest at the rate of one percent 45 per month on the date retention was due and owing. 46 2. Notwithstanding the provisions of subdivision one of this section, 47 no portion of any payment due and owing to a material supplier for mate- 48 rials which have been delivered, accepted and are covered by a manufac- 49 turer's warranty, and/or graded to meet industry standards shall be 50 retained by an owner, contractor or subcontractor. 51 § 4. This act shall take effect on the thirtieth day after it shall 52 have become a law and shall apply to materials delivered and accepted on 53 or after such effective date.