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S T A T E O F N E W Y O R K
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11526--B
I N A S S E M B L Y
May 31, 2002
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Introduced by COMMITTEE ON RULES -- (at request of M. of A. P. Rivera,
Klein, Green, Abbate, DiNapoli, Espaillat, Farrell, McLaughlin, Phef-
fer, Tokasz) -- read once and referred to the Committee on Economic
Development, Job Creation, Commerce and Industry -- committee
discharged, bill amended, ordered reprinted as amended and recommitted
to said committee -- reported and referred to the Committee on Rules
-- Rules Committee discharged, bill amended, ordered reprinted as
amended and recommitted to the Committee on Rules
AN ACT to amend the general business law, in relation to construction contracts
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Legislative intent. The legislature finds that firms and
2 organizations that provide construction services in this state expect
3 and deserve to be paid in a prompt and timely manner. By and large
4 providers and receivers of such services contract freely and, in good
5 faith, meet their obligations in a timely and just manner. It is the
6 intent of this legislation to address those situations in which, contra-
7 ry to existing contracts, payments for approved services are unjustly
8 delayed. Unjustified delays in paying construction contractors and mate-
9 rial suppliers may discourage such firms and organizations from doing
10 business in this state. Consequently, it is the intent of this legis-
11 lation to set default standards for the payment of bills on construction
12 contracts and in those situations where payments are not made within
13 time periods established in such contracts, authorize remedies including
14 reasonable interest payments and circumstances for stop work provisions.
15 Consistent with accepted business practices and with sound principles
16 of construction and fiscal management, it is the intent of this legis-
17 lation to encourage parties to construction contracts to make payments
18 at least as expeditiously as existing contracts require and further
19 reduce existing payment processing time wherever feasible, while at the
20 same time permitting such entities to contract freely, perform proper
21 and reasonable management and financial oversight activities designed to
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
{ } is old law to be omitted.
LBD15137-17-2
A. 11526--B 2
1 ensure that construction services are provided in a safe, efficient and
2 fiscally prudent manner.
3 S 2. The general business law is amended by adding a new article 35-E
4 to read as follows:
5 ARTICLE 35-E
6 CONSTRUCTION CONTRACTS
7 SECTION 756. DEFINITIONS.
8 756-A. OBLIGATIONS.
9 756-B. REMEDIES.
10 756-C. RETENTION.
11 756-D. EXCEPTIONS FOR FAILURE OF LENDER TO DISBURSE FUNDS.
12 756-E. EXCEPTIONS FOR LOWER MANHATTAN RECONSTRUCTION.
13 757. VOID PROVISIONS.
14 758. SEVERABILITY.
15 S 756. DEFINITIONS. AS USED IN THIS ARTICLE: 1. "CONSTRUCTION
16 CONTRACT" MEANS A WRITTEN OR ORAL AGREEMENT FOR THE CONSTRUCTION, RECON-
17 STRUCTION, ALTERATION, MAINTENANCE, MOVING OR DEMOLITION OF ANY BUILD-
18 ING, STRUCTURE OR IMPROVEMENT, OR RELATING TO THE EXCAVATION OF OR OTHER
19 DEVELOPMENT OR IMPROVEMENT TO LAND, AND WHERE THE AGGREGATE COST OF THE
20 CONSTRUCTION PROJECT INCLUDING ALL LABOR, SERVICES, MATERIALS AND EQUIP-
21 MENT TO BE FURNISHED, EQUALS OR EXCEEDS TWO HUNDRED FIFTY THOUSAND
22 DOLLARS. FOR THE PURPOSES OF THIS ARTICLE A CONSTRUCTION CONTRACT SHALL
23 NOT INCLUDE ANY SUCH CONTRACT MADE AND AWARDED BY THE STATE, ANY PUBLIC
24 DEPARTMENT, ANY PUBLIC BENEFIT CORPORATION, ANY PUBLIC CORPORATION OR
25 OFFICIAL THEREOF, OR A MUNICIPAL CORPORATION OR OFFICIAL THEREOF FOR
26 CONSTRUCTION, RECONSTRUCTION, ALTERATION, REPAIR, MAINTENANCE, MOVING OR
27 DEMOLITION OF ANY PUBLIC WORKS PROJECT NOR ANY CONTRACT WITH A CONTRAC-
28 TOR OR SUBCONTRACTOR WHICH IS PART OF SUCH PROJECT; OR ANY SUCH CONTRACT
29 THE PURPOSE OF WHICH IS THE CONSTRUCTION, RECONSTRUCTION, ALTERATION,
30 REPAIR, MAINTENANCE, MOVING OR DEMOLITION OF AN INDIVIDUAL ONE, TWO OR
31 THREE FAMILY RESIDENTIAL DWELLING OR A RESIDENTIAL TRACT DEVELOPMENT OF
32 ONE HUNDRED FIFTY OR LESS ONE OR TWO FAMILY DWELLINGS, OR ANY RESIDEN-
33 TIAL CONSTRUCTION PROJECT WHERE THE AGGREGATE SIZE OF SUCH PROJECT IS
34 NINE THOUSAND SQUARE FEET OR LESS, OR ANY RESIDENTIAL PROJECT OF FEWER
35 THAN ONE HUNDRED FIFTY UNITS WHICH RECEIVES FINANCIAL ASSISTANCE FROM
36 THE FEDERAL GOVERNMENT, THE STATE OR A MUNICIPAL ENTITY DESIGNED FOR
37 HOUSEHOLDS EARNING AN AVERAGE OF ONE HUNDRED TWENTY-FIVE PERCENT OF THE
38 HOUSING AND URBAN DEVELOPMENT AGENCY AREA MEDIAN INCOME.
39 2. "CONTRACTOR" MEANS ANY PERSON, FIRM, PARTNERSHIP, CORPORATION,
40 ASSOCIATION, COMPANY, ORGANIZATION OR OTHER ENTITY, INCLUDING A
41 CONSTRUCTION MANAGER, OR ANY COMBINATION THEREOF, WHICH ENTERS INTO A
42 CONSTRUCTION CONTRACT WITH AN OWNER.
43 3. "OWNER" MEANS ANY PERSON, FIRM, PARTNERSHIP, CORPORATION, COMPANY,
44 ASSOCIATION OR OTHER ORGANIZATION OR OTHER ENTITY, OR A COMBINATION OF
45 ANY THEREOF, (WITH AN OWNERSHIP INTEREST, WHETHER THE INTEREST OR ESTATE
46 IS IN FEE, AS VENDEE UNDER A CONTRACT TO PURCHASE, AS LESSEE OR ANOTHER
47 INTEREST OR ESTATE LESS THAN FEE) THAT CAUSES A BUILDING, STRUCTURE OR
48 IMPROVEMENT, NEW OR EXISTING, TO BE CONSTRUCTED, ALTERED, REPAIRED,
49 MAINTAINED, MOVED OR DEMOLISHED OR THAT CAUSES LAND TO BE EXCAVATED OR
50 OTHERWISE DEVELOPED OR IMPROVED.
51 4. "SUBCONTRACTOR" MEANS ANY PERSON, FIRM, PARTNERSHIP, CORPORATION,
52 COMPANY, ASSOCIATION, ORGANIZATION OR OTHER ENTITY, OR ANY COMBINATION
53 THEREOF, WHICH IS A PARTY TO A CONTRACT WITH A CONTRACTOR OR ANOTHER
54 SUBCONTRACTOR TO PERFORM A PORTION OF WORK PURSUANT TO A CONSTRUCTION
55 CONTRACT.
A. 11526--B 3
1 5. "MATERIAL SUPPLIER" MEANS ANY PERSON, FIRM, PARTNERSHIP, CORPO-
2 RATION, COMPANY, ASSOCIATION, OR OTHER ORGANIZATION OR ENTITY, OR ANY
3 COMBINATION THEREOF, WHICH IS PARTY TO A CONTRACT WITH AN OWNER,
4 CONTRACTOR OR SUBCONTRACTOR, FOR THE PROVISION OF CONSTRUCTION MATERIALS
5 AND/OR EQUIPMENT NECESSARY TO THE COMPLETION OF A CONSTRUCTION CONTRACT.
6 6. "NOTICE." ANY NOTICE BY THE OWNER, CONTRACTOR OR SUBCONTRACTOR
7 UNDER THIS ARTICLE SHALL BE SENT BY FACSIMILE AND REPUTABLE OVERNIGHT
8 COURIER AND SHALL BE DEEMED EFFECTIVE ON THE DATE SENT.
9 S 756-A. OBLIGATIONS. EXCEPT AS OTHERWISE PROVIDED IN THIS ARTICLE,
10 THE TERMS AND CONDITIONS OF A CONSTRUCTION CONTRACT SHALL SUPERSEDE THE
11 PROVISIONS OF THIS ARTICLE AND GOVERN THE CONDUCT OF THE PARTIES THERE-
12 TO.
13 1. BILLING CYCLE. THE PARTIES TO A CONSTRUCTION CONTRACT MAY, BY MUTU-
14 AL AGREEMENT, ESTABLISH A BILLING CYCLE FOR THE SUBMISSION OF INVOICES
15 REQUESTING PAYMENT FOR WORK PERFORMED PURSUANT TO A CONSTRUCTION
16 CONTRACT. IN THE ABSENCE OF AN AGREEMENT BY THE PARTIES AS TO THE BILL-
17 ING CYCLE, THE BILLING CYCLE SHALL BE THE CALENDAR MONTH WITHIN WHICH
18 THE WORK IS PERFORMED.
19 2. INVOICES. (A) A CONTRACTOR SHALL BE ENTITLED TO INVOICE THE OWNER
20 FOR INTERIM PAYMENTS AT THE END OF THE BILLING CYCLE. A CONTRACTOR SHALL
21 BE ENTITLED TO SUBMIT A FINAL INVOICE FOR PAYMENT IN FULL UPON THE
22 PERFORMANCE OF ALL THE CONTRACTOR`S OBLIGATION UNDER THE CONTRACT.
23 (I) UPON DELIVERY OF AN INVOICE AND ALL CONTRACTUALLY REQUIRED
24 DOCUMENTATION, AN OWNER SHALL APPROVE OR DISAPPROVE ALL OR A PORTION OF
25 SUCH INVOICE WITHIN TWELVE BUSINESS DAYS. OWNER APPROVAL OF INVOICES
26 SHALL NOT BE UNREASONABLY WITHHELD NOR SHALL AN OWNER, IN BAD FAITH
27 DISAPPROVE ALL OR A PORTION OF AN INVOICE. IF AN OWNER DECLINES TO
28 APPROVE AN INVOICE OR A PORTION THEREOF, IT MUST PREPARE AND ISSUE A
29 WRITTEN STATEMENT DESCRIBING THOSE ITEMS IN THE INVOICE THAT ARE NOT
30 APPROVED. AN OWNER MAY DECLINE TO APPROVE AN INVOICE OR PORTION OF AN
31 INVOICE FOR:
32 (1) UNSATISFACTORY OR DISPUTED JOB PROGRESS;
33 (2) DEFECTIVE CONSTRUCTION WORK OR MATERIAL NOT REMEDIED;
34 (3) DISPUTED WORK MATERIALS;
35 (4) FAILURE TO COMPLY WITH OTHER MATERIAL PROVISIONS OF THE
36 CONSTRUCTION CONTRACT;
37 (5) FAILURE OF THE CONTRACTOR TO MAKE TIMELY PAYMENTS FOR LABOR
38 INCLUDING COLLECTIVELY BARGAINED FRINGE BENEFIT CONTRIBUTIONS, PAYROLL
39 TAXES AND INSURANCE, EQUIPMENT AND MATERIALS, DAMAGE TO THE OWNER, OR
40 REASONABLE EVIDENCE THAT THE CONSTRUCTION CONTRACT CANNOT BE COMPLETED
41 FOR THE UNPAID BALANCE OF THE CONSTRUCTION CONTRACT SUM; OR
42 (6) FAILURE OF THE OWNER`S ARCHITECT TO CERTIFY PAYMENT FOR ANY OR ALL
43 OF THE REASONS SET FORTH IN THIS SECTION SO LONG AS THE REASONS ARE
44 INCLUDED IN THE OWNER`S WRITTEN STATEMENT OF DISAPPROVAL.
45 (II) UPON DELIVERY OF AN INVOICE AND ALL CONTRACTUALLY REQUIRED
46 DOCUMENTATION, A CONTRACTOR OR SUBCONTRACTOR SHALL APPROVE OR DISAPPROVE
47 ALL OR A PORTION OF SUCH INVOICE WITHIN TWELVE BUSINESS DAYS. CONTRACTOR
48 AND SUBCONTRACTOR APPROVAL OF INVOICES SHALL NOT BE UNREASONABLY WITH-
49 HELD NOR SHALL A CONTRACTOR OR SUBCONTRACTOR, IN BAD FAITH, DISAPPROVE
50 ALL OR A PORTION OF AN INVOICE. NOTHING IN THIS SECTION SHALL PROHIBIT
51 THE CONTRACTOR OR SUBCONTRACTOR, AT THE TIME OF APPLICATION TO THE OWNER
52 OR CONTRACTOR, FROM WITHHOLDING SUCH APPLICATION TO THE OWNER OR
53 CONTRACTOR FOR PAYMENT TO THE SUBCONTRACTOR OR MATERIAL SUPPLIER FOR:
54 (1) UNSATISFACTORY OR DISPUTED JOB PROGRESS;
55 (2) DEFECTIVE CONSTRUCTION WORK OR MATERIAL NOT REMEDIED;
56 (3) DISPUTED WORK;
A. 11526--B 4
1 (4) FAILURE TO COMPLY WITH OTHER MATERIAL PROVISIONS OF THE
2 CONSTRUCTION CONTRACT; OR
3 (5) FAILURE OF THE SUBCONTRACTOR TO MAKE TIMELY PAYMENTS FOR LABOR
4 INCLUDING COLLECTIVELY BARGAINED FRINGE BENEFIT CONTRIBUTIONS; PAYROLL
5 TAXES AND INSURANCE, EQUIPMENT AND MATERIALS, DAMAGE TO CONTRACTOR OR
6 ANOTHER SUBCONTRACTOR OR MATERIAL SUPPLIER, OR REASONABLE EVIDENCE THAT
7 THE SUBCONTRACT CANNOT BE COMPLETED FOR THE UNPAID BALANCE OF THE
8 SUBCONTRACT SUM.
9 (B) NOTHING IN THIS SUBDIVISION SHALL AUTHORIZE THE WITHHOLDING OF AN
10 APPLICATION TO THE OWNER OR CONTRACTOR FOR THE PAYMENT TO A SUBCONTRAC-
11 TOR OR MATERIAL SUPPLIER WHEN DUE TO A DELAY IN JOB PROGRESS BY THE
12 OWNER, CONTRACTOR OR ANOTHER SUBCONTRACTOR OR MATERIAL SUPPLIER OTHER
13 THAN THE APPLICANT OR APPLICANT`S SUBCONTRACTOR OR MATERIAL SUPPLIER.
14 3. PAYMENT. (A) THE OWNER`S PAYMENT OF A CONTRACTOR`S INTERIM AND
15 FINAL INVOICES SHALL BE MADE ON THE BASIS OF A DULY APPROVED INVOICE OF
16 WORK PERFORMED AND THE MATERIAL SUPPLIED DURING THE BILLING CYCLE.
17 (I) UNLESS THE PROVISIONS OF THIS ARTICLE PROVIDE OTHERWISE, THE OWNER
18 SHALL PAY THE CONTRACTOR STRICTLY IN ACCORDANCE WITH THE TERMS OF THE
19 CONSTRUCTION CONTRACT.
20 (II) UNLESS OTHERWISE AGREED TO BY THE PARTIES, PAYMENT OF AN INTERIM
21 OR FINAL INVOICE SHALL BE DUE FROM THE OWNER NOT LATER THAN THIRTY DAYS
22 AFTER APPROVAL OF THE INVOICE.
23 (III) IF PAYMENT BY THE OWNER IS CONTINGENT UPON LENDER APPROVAL,
24 PAYMENT OF A CONTRACTOR`S INTERIM OR FINAL INVOICE OR THE AMOUNT OF LOAN
25 PROCEEDS DISBURSED BY THE LENDER FOR PAYMENT OF THE CONTRACTOR`S INTERIM
26 OR FINAL INVOICE SHALL BE DUE FROM THE OWNER SEVEN DAYS AFTER RECEIPT BY
27 THE OWNER OF GOOD FUNDS EXCEPT WHERE THE PROVISIONS OF SECTION SEVEN
28 HUNDRED FIFTY-SIX-D OF THIS ARTICLE APPLIES.
29 (IV) AN OWNER MAY WITHHOLD FROM AN INTERIM PAYMENT ONLY AN AMOUNT THAT
30 IS SUFFICIENT TO PAY THE COSTS AND EXPENSES THE OWNER REASONABLY EXPECTS
31 TO INCUR IN ORDER TO CURE THE DEFECT OR CORRECT ANY ITEMS SET FORTH IN
32 WRITING PURSUANT TO SUBPARAGRAPH (I) OF PARAGRAPH (A) OF SUBDIVISION TWO
33 OF THIS SECTION, OR IN THE ALTERNATIVE, TO WITHHOLD AN AMOUNT NOT TO
34 EXCEED THE LINE ITEM AMOUNT APPEARING IN THE AGREED SCHEDULE OF VALUES
35 TOGETHER WITH ANY CHANGE ORDERS, ADDITIONS AND/OR DELETIONS, IF SUCH
36 SCHEDULE HAS BEEN PREVIOUSLY SUBMITTED, AND/OR AN AMOUNT SUFFICIENT TO
37 COVER LIQUIDATED DAMAGES AS ESTABLISHED IN AN AGREED UPON SCHEDULE IN
38 THE CONSTRUCTION CONTRACT.
39 (B) THE CONTRACTOR OR SUBCONTRACTOR`S PAYMENT OF SUBCONTRACTOR OR
40 MATERIAL SUPPLIER`S INTERIM OR FINAL INVOICE SHALL BE MADE ON THE BASIS
41 OF A DULY APPROVED INVOICE OF THE WORK PERFORMED AND MATERIALS SUPPLIED
42 DURING THE BILLING CYCLE.
43 (I) UNLESS THE PROVISIONS OF THIS ARTICLE PROVIDE OTHERWISE, THE
44 CONTRACTOR OR SUBCONTRACTOR SHALL PAY THE SUBCONTRACTOR STRICTLY IN
45 ACCORDANCE WITH THE TERMS OF THE CONSTRUCTION CONTRACT. PERFORMANCE BY A
46 SUBCONTRACTOR IN ACCORDANCE WITH THE PROVISIONS OF ITS CONTRACT SHALL
47 ENTITLE IT TO PAYMENT FROM THE PARTY WITH WHICH IT CONTRACTS. NOTWITH-
48 STANDING THIS ARTICLE, WHERE A CONTRACTOR ENTERS INTO A CONSTRUCTION
49 CONTRACT WITH A SUBCONTRACTOR AS AGENT FOR A DISCLOSED OWNER, THE
50 PAYMENT OBLIGATION SHALL FLOW DIRECTLY FROM THE DISCLOSED OWNER AS PRIN-
51 CIPAL TO THE SUBCONTRACTOR AND THROUGH THE AGENT.
52 (II) WHEN A SUBCONTRACTOR HAS PERFORMED IN ACCORDANCE WITH THE
53 PROVISIONS OF ITS CONSTRUCTION CONTRACT, THE CONTRACTOR SHALL PAY TO THE
54 SUBCONTRACTOR, AND EACH SUBCONTRACTOR SHALL IN TURN PAY TO ITS SUBCON-
55 TRACTORS, THE FULL OR PROPORTIONATE AMOUNT OF FUNDS RECEIVED FROM THE
56 OWNER FOR EACH SUBCONTRACTOR`S WORK AND MATERIALS BASED ON WORK OR
A. 11526--B 5
1 SERVICES PROVIDED UNDER THE CONSTRUCTION CONTRACT, SEVEN DAYS AFTER
2 RECEIPT OF GOOD FUNDS FOR EACH INTERIM OR FINAL PAYMENT, PROVIDED ALL
3 CONTRACTUALLY REQUIRED DOCUMENTATION AND WAIVERS ARE RECEIVED.
4 (III) A CONTRACTOR OR SUBCONTRACTOR MAY WITHHOLD AMOUNTS RECEIVED FROM
5 AN OWNER IN CONNECTION WITH AN INTERIM PAYMENT DUE TO A SUBCONTRACTOR OR
6 MATERIAL SUPPLIER ONLY SUCH SUMS THAT ARE SUFFICIENT TO PAY THE DIRECT
7 EXPENSES AS ARE REASONABLE TO CORRECT DEFICIENCIES IDENTIFIED PURSUANT
8 TO SUBPARAGRAPH (II) OF PARAGRAPH (A) OF SUBDIVISION TWO OF THIS
9 SECTION, OR IN THE ALTERNATIVE, TO WITHHOLD AN AMOUNT NOT TO EXCEED THE
10 LINE ITEM AMOUNT APPEARING IN THE AGREED SCHEDULE OF VALUES, TOGETHER
11 WITH ANY CHANGE ORDER, ADDITIONS OR DELETIONS, IF SUCH SCHEDULE HAS BEEN
12 PREVIOUSLY SUBMITTED, AND/OR AN AMOUNT SUFFICIENT TO COVER LIQUIDATED
13 DAMAGES AS ESTABLISHED IN AN AGREED UPON SCHEDULE IN THE CONSTRUCTION
14 CONTRACT.
15 (IV) IF A CONTRACTOR, AFTER SUBMITTING AN INVOICE TO AN OWNER UNDER A
16 CONSTRUCTION CONTRACT, BUT BEFORE MAKING A PAYMENT TO A SUBCONTRACTOR OR
17 MATERIAL SUPPLIER FOR THE SUBCONTRACTOR`S OR MATERIAL SUPPLIER`S
18 PERFORMANCE COVERED BY SUCH INVOICE, DISCOVERS THAT ALL OR A PORTION OF
19 THE PAYMENT OTHERWISE DUE TO THE SUBCONTRACTOR OR MATERIAL SUPPLIER IS
20 SUBJECT TO WITHHOLDING FROM THE SUBCONTRACTOR OR MATERIAL SUPPLIER IN
21 ACCORDANCE WITH THE CONSTRUCTION CONTRACT AND THE CONDITIONS SET FORTH
22 IN SUBPARAGRAPH (II) OF PARAGRAPH (A) OF SUBDIVISION TWO OF THIS
23 SECTION, THEN THE CONTRACTOR SHALL:
24 (1) AS SOON AS PRACTICABLE UPON ASCERTAINING THE CAUSE GIVING RISE TO
25 A WITHHOLDING, BUT PRIOR TO THE DUE DATE FOR A SUBCONTRACTOR OR MATERIAL
26 SUPPLIER PAYMENT, FURNISH TO THE SUBCONTRACTOR OR MATERIAL SUPPLIER AND
27 THE OWNER WRITTEN NOTICE OF WITHHOLDING SPECIFYING CONDITIONS FOR WITH-
28 HOLDING PAYMENT AND IDENTIFYING THE AMOUNT TO BE WITHHELD;
29 (2) REDUCE THE SUBCONTRACTOR`S OR MATERIAL SUPPLIER`S INTERIM PAYMENT
30 BY AN AMOUNT NOT TO EXCEED THE AMOUNT SPECIFIED IN THE NOTICE OF WITH-
31 HOLDING; AND
32 (3) PAY THE SUBCONTRACTOR OR MATERIAL SUPPLIER AMOUNTS WITHHELD WITHIN
33 SEVEN DAYS AFTER CORRECTION OF THE IDENTIFIED SUBCONTRACTOR OR MATERIAL
34 SUPPLIER PERFORMANCE DEFICIENCY AND RECEIPT OF ALL REQUIRED DOCUMENTA-
35 TION AND WAIVERS, UNLESS THE FUNDS THEREFORE MUST BE OBTAINED FROM THE
36 OWNER`S NEXT INTERIM PAYMENT DUE TO A REDUCTION IN THE CONTRACTOR`S
37 BILLING DIRECTLY RESULTING FROM THE SUBCONTRACTOR`S OR MATERIAL SUPPLI-
38 ER`S PERFORMANCE DEFICIENCY IDENTIFIED IN THE NOTICE OF WITHHOLDING.
39 (C) A WRITTEN NOTICE OF ANY WITHHOLDING UNDER THIS SUBDIVISION SHALL
40 BE ISSUED TO A SUBCONTRACTOR OR MATERIAL SUPPLIER SPECIFYING:
41 (I) THE AMOUNT TO BE WITHHELD;
42 (II) THE SPECIFIC CAUSES FOR WITHHOLDING UNDER THE TERMS OF THE
43 CONSTRUCTION CONTRACT AND PURSUANT TO THIS SUBDIVISION;
44 (III) THE REMEDIAL ACTIONS NECESSARY TO BE TAKEN BY THE SUBCONTRACTOR
45 OR MATERIAL SUPPLIER IN ORDER TO RECEIVE PAYMENTS OF THE AMOUNTS WITH-
46 HELD; AND
47 (IV) THE DOCUMENTATION AND WAIVERS REQUIRED.
48 4. NOTICE. A CONTRACTOR OR SUBCONTRACTOR SHALL DISCLOSE TO A SUBCON-
49 TRACTOR, AT THE TIME THE CONSTRUCTION SUBCONTRACT IS ENTERED INTO, THE
50 DUE DATE FOR RECEIPT OF PAYMENTS TO THE CONTRACTOR OR SUBCONTRACTOR FROM
51 THE OWNER OR THE CONTRACTOR AS THE CASE MAY BE. IF A CONTRACTOR OR
52 SUBCONTRACTOR FAILS TO ACCURATELY DISCLOSE THE DUE DATE TO A SUBCONTRAC-
53 TOR, THE CONTRACTOR OR SUBCONTRACTOR SHALL BE OBLIGATED TO PAY THE
54 SUBCONTRACTOR AS THOUGH THE DUE DATES ESTABLISHED IN PARAGRAPH (A) OF
55 SUBDIVISION THREE OF THIS SECTION WERE MET BY THE OWNER. IN ADDITION,
56 UPON WRITTEN REQUEST OF A SUBCONTRACTOR, THE OWNER SHALL PROVIDE NOTICE
A. 11526--B 6
1 TO SUCH SUBCONTRACTOR WITHIN FIVE DAYS OF MAKING ANY INTERIM OR FINAL
2 PAYMENT TO THE CONTRACTOR. THE SUBCONTRACTOR`S REQUEST SHALL REMAIN IN
3 EFFECT FOR THE DURATION OF THE SUBCONTRACTOR`S WORK ON THE PROJECT.
4 S 756-B. REMEDIES. 1. (A) IF ANY INTERIM OR FINAL PAYMENT TO A
5 CONTRACTOR IS DELAYED BEYOND THE DUE DATE ESTABLISHED IN PARAGRAPH (A)
6 OF SUBDIVISION THREE OF SECTION SEVEN HUNDRED FIFTY-SIX-A OF THIS ARTI-
7 CLE, THE OWNER SHALL PAY THE CONTRACTOR INTEREST BEGINNING ON THE NEXT
8 DAY AT THE RATE OF ONE PERCENT PER MONTH OR FRACTION OF A MONTH ON THE
9 UNPAID BALANCE, OR AT A HIGHER RATE CONSISTENT WITH THE CONSTRUCTION
10 CONTRACT.
11 (B) NOTWITHSTANDING ANY CONTRARY AGREEMENT, IF ANY INTERIM OR FINAL
12 PAYMENT TO A SUBCONTRACTOR IS DELAYED BEYOND THE DUE DATE ESTABLISHED IN
13 PARAGRAPH (B) OF SUBDIVISION THREE OF SECTION SEVEN HUNDRED FIFTY-SIX-A
14 OF THIS ARTICLE THE CONTRACTOR OR SUBCONTRACTOR SHALL PAY ITS SUBCON-
15 TRACTOR INTEREST, BEGINNING ON THE NEXT DAY, AT THE RATE OF ONE PERCENT
16 A MONTH OR FRACTION OF A MONTH ON THE UNPAID BALANCE, OR AT A HIGHER
17 RATE CONSISTENT WITH THE CONSTRUCTION CONTRACT.
18 2. (A) (I) IF AN OWNER FAILS TO APPROVE OR DISAPPROVE AN INVOICE WITH-
19 IN THE TIME LIMITS ESTABLISHED IN SUBPARAGRAPH (I) OF PARAGRAPH (A) OF
20 SUBDIVISION TWO OF SECTION SEVEN HUNDRED FIFTY-SIX-A OF THIS ARTICLE, OR
21 TO PAY THE CONTRACTOR THE UNDISPUTED INVOICE AMOUNT WITHIN THE TIME
22 LIMITS PROVIDED BY PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION SEVEN
23 HUNDRED FIFTY-SIX-A OF THIS ARTICLE, THE CONTRACTOR MAY SUSPEND CONTRAC-
24 TUALLY REQUIRED PERFORMANCE, ONLY AFTER PROVIDING THE OWNER WRITTEN
25 NOTICE AND AN OPPORTUNITY TO CURE CONSISTENT WITH SUBPARAGRAPH (II) OF
26 THIS PARAGRAPH.
27 (II) A CONTRACTOR INTENDING TO SUSPEND PERFORMANCE ON THE CONSTRUCTION
28 CONTRACT FOR FAILURE OF THE OWNER TO MAKE TIMELY PAYMENTS OR APPROVALS
29 WITHIN THE TIME LIMITS PROVIDED BY THIS ARTICLE MUST PROVIDE THE OWNER
30 WRITTEN NOTICE AT LEAST TEN CALENDAR DAYS BEFORE THE CONTRACTOR`S
31 INTENDED SUSPENSION. SUCH NOTICE SHALL:
32 (A) INFORM THE OWNER THAT PAYMENT FOR UNDISPUTED INVOICE AMOUNTS HAVE
33 NOT BEEN RECEIVED; AND
34 (B) STATE THE INTENT OF THE CONTRACTOR TO SUSPEND PERFORMANCE FOR
35 NON-PAYMENT.
36 IF AFTER THE TENTH CALENDAR DAY FOLLOWING WRITTEN NOTICE THE OWNER HAS
37 NOT CURED THE DEFICIENCY, THE CONTRACTOR MAY SUSPEND PERFORMANCE.
38 (III) A CONTRACTOR SHALL NOT BE DEEMED IN BREACH OF THE CONSTRUCTION
39 CONTRACT FOR SUSPENDING PERFORMANCE PURSUANT TO THIS SECTION.
40 (B)(I) A SUBCONTRACTOR MAY SUSPEND CONTRACTUALLY REQUIRED PERFORMANCE
41 IF ANY OR ALL OF THE OCCURRENCES OUTLINED IN CLAUSES (A), (B) AND (C) OF
42 THIS SUBPARAGRAPH OCCUR AND ONLY AFTER PROVIDING WRITTEN NOTICE AND AN
43 OPPORTUNITY TO CURE CONSISTENT WITH SUBPARAGRAPH (II) OF THIS PARAGRAPH:
44 (A) IF AN OWNER FAILS TO MAKE TIMELY PAYMENTS FOR UNDISPUTED INVOICES
45 WITHIN THE TIME LIMITS ESTABLISHED BY SUBDIVISION THREE OF SECTION SEVEN
46 HUNDRED FIFTY-SIX-A OF THIS ARTICLE FOR THE SUBCONTRACTOR`S WORK AND THE
47 CONTRACTOR ALSO FAILS TO PAY THE SUBCONTRACTOR FOR THE APPROVED WORK;
48 (B) IF AN OWNER PAYS THE CONTRACTOR WITHIN THE TIME LIMITS ESTABLISHED
49 BY SUBDIVISION THREE OF SECTION SEVEN HUNDRED FIFTY-SIX-A OF THIS ARTI-
50 CLE FOR UNDISPUTED INVOICES FOR WORK PERFORMED BY THE SUBCONTRACTOR BUT
51 THE CONTRACTOR FAILS TO MAKE PAYMENT TO THE SUBCONTRACTOR WITHIN THE
52 TIME FRAMES ESTABLISHED BY THIS ARTICLE FOR THE SUBCONTRACTOR`S WORK;
53 (C) IF AN OWNER FAILS TO APPROVE OR DISAPPROVE A PORTION OF CONTRAC-
54 TOR`S INVOICE FOR WORK PERFORMED BY THE SUBCONTRACTOR WITHIN THE TIME
55 LIMITS ESTABLISHED IN PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION SEVEN
56 HUNDRED FIFTY-SIX-A OF THIS ARTICLE;
A. 11526--B 7
1 (D) IF A CONTRACTOR OR SUBCONTRACTOR FAILS TO APPROVE OR DISAPPROVE A
2 SUBCONTRACTOR`S INVOICE WITHIN THE TIME LIMITS ESTABLISHED IN PARAGRAPH
3 (B) OF SUBDIVISION THREE OF SECTION SEVEN HUNDRED FIFTY-SIX-A OF THIS
4 ARTICLE; OR
5 (E) IF AN OWNER FAILS TO APPROVE PORTIONS OF THE CONTRACTORS` BILLING
6 FOR WORK PERFORMED BY THE SUBCONTRACTOR WITHIN THE TIME LIMITS ESTAB-
7 LISHED BY THIS ARTICLE AND THE REASONS FOR SUCH FAILURE ARE NOT THE
8 FAULT OF OR DIRECTLY RELATED TO THE SUBCONTRACTOR`S WORK.
9 (II) A SUBCONTRACTOR INTENDING TO SUSPEND PERFORMANCE FOR FAILURE TO
10 RECEIVE TIMELY PAYMENTS WITHIN THE TIME LIMITS ESTABLISHED PURSUANT TO
11 THIS ARTICLE MUST PROVIDE BOTH THE OWNER AND THE CONTRACTOR WRITTEN
12 NOTICE AT LEAST TEN CALENDAR DAYS BEFORE THE SUBCONTRACTOR`S INTENDED
13 SUSPENSION. SUCH NOTICE SHALL:
14 (A) INFORM THE OWNER AND THE CONTRACTOR THAT PAYMENT FOR UNDISPUTED
15 BILLING AMOUNTS HAVE NOT BEEN RECEIVED; AND
16 (B) STATE THE INTENT OF THE CONTRACTOR TO SUSPEND PERFORMANCE FOR
17 NON-PAYMENT.
18 IF AFTER THE TENTH CALENDAR DAY FOLLOWING WRITTEN NOTICE EITHER THE
19 OWNER OR THE CONTRACTOR HAS NOT CURED THE DEFICIENCY, THE SUBCONTRACTOR
20 MAY SUSPEND PERFORMANCE.
21 (III) A SUBCONTRACTOR SHALL NOT BE DEEMED IN BREACH OF THE
22 CONSTRUCTION CONTRACT FOR SUSPENDING PERFORMANCE PURSUANT TO THIS
23 SECTION.
24 (IV) (A) A CONTRACTOR OR SUBCONTRACTOR THAT SUSPENDS PERFORMANCE AS
25 PROVIDED IN THIS SECTION SHALL NOT BE REQUIRED TO FURNISH FURTHER LABOR,
26 MATERIALS OR SERVICES UNTIL THE CONTRACTOR OR SUBCONTRACTOR IS PAID THE
27 UNDISPUTED INVOICE AMOUNT AT THE TIME PERIOD FOR COMPLETION AS PROVIDED
28 IN THE CONSTRUCTION CONTRACT. ALL OF THE TIME FRAMES ESTABLISHED WITHIN
29 THE CONSTRUCTION CONTRACT OF A CONTRACTOR OR SUBCONTRACTOR SHALL BE
30 EXTENDED FOR THE LENGTH OF TIME PERFORMANCE WAS SUSPENDED. PAYMENT OF
31 DOCUMENTED ACTUAL COSTS INCURRED FOR RE-MOBILIZATION RESULTING FROM
32 SUSPENSION SHALL BE NEGOTIATED BETWEEN THE PARTIES.
33 (B) IN THE EVENT OF SUSPENSION OF A CONSTRUCTION CONTRACT, AS PROVIDED
34 IN THIS ARTICLE, ALL MATERIALS, EQUIPMENT, TOOLS, CONSTRUCTION EQUIPMENT
35 AND MACHINERY LOCATED AT THE JOB SITE SHALL REMAIN THE SOLE AND EXCLU-
36 SIVE PROPERTY OF THE CONTRACTOR OR SUBCONTRACTOR AND SHALL BE REMOVED
37 FROM THE JOB SITE, IF NECESSARY, WITHIN A REASONABLE PERIOD OF TIME.
38 ACCESS TO THE CONTRACTOR`S OR SUBCONTRACTOR`S PROPERTY SHALL NOT BE
39 UNREASONABLY WITHHELD.
40 S 756-C. RETENTION. BY MUTUAL AGREEMENT OF THE RELEVANT PARTIES AN
41 OWNER MAY RETAIN A REASONABLE AMOUNT OF THE CONTRACT SUM AS RETAINAGE. A
42 CONTRACTOR OR SUBCONTRACTOR MAY ALSO RETAIN A REASONABLE AMOUNT FOR
43 RETAINAGE SO LONG AS THE AMOUNT DOES NOT EXCEED THE ACTUAL PERCENTAGE
44 RETAINED BY THE OWNER. RETAINAGE SHALL BE RELEASED BY THE OWNER TO THE
45 CONTRACTOR NO LATER THAN THIRTY DAYS AFTER THE FINAL APPROVAL OF THE
46 WORK UNDER A CONSTRUCTION CONTRACT. IN THE EVENT THAT AN OWNER FAILS TO
47 RELEASE RETAINAGE AS REQUIRED BY THIS ARTICLE, OR THE CONTRACTOR OR
48 SUBCONTRACTOR FAILS TO RELEASE A PROPORTIONATE AMOUNT OF RETAINAGE TO
49 THE RELEVANT PARTIES AFTER RECEIPT OF RETAINAGE FROM THE OWNER, THE
50 OWNER, CONTRACTOR, OR SUBCONTRACTOR, AS THE CASE MAY BE, SHALL BE
51 SUBJECT TO THE PAYMENT OF INTEREST AT THE RATE OF ONE PERCENT PER MONTH
52 ON THE DATE RETENTION WAS DUE AND OWING.
53 S 756-D. EXCEPTIONS FOR FAILURE OF LENDER TO DISBURSE FUNDS. THE DATE
54 OF PAYMENT REQUIRED BY THE OWNER, THE CONTRACTOR AND/OR SUBCONTRACTOR
55 PURSUANT TO SECTION SEVEN HUNDRED FIFTY-SIX-A OF THIS ARTICLE, SHALL BE
56 EXTENDED TO THE SEVENTH DAY AFTER THE OWNER, CONTRACTOR OR SUBCONTRAC-
A. 11526--B 8
1 TOR, AS THE CASE MAY BE, RECEIVES LOAN PROCEEDS NECESSARY TO MAKE SUCH
2 PAYMENT IN THE EVENT THAT:
3 1. THE OWNER, CONTRACTOR OR SUBCONTRACTOR, AS THE CASE MAY BE, HAS
4 OBTAINED A LOAN INTENDED TO PAY FOR ALL OR PART OF THE CONSTRUCTION
5 CONTRACT;
6 2. THE OWNER, CONTRACTOR OR SUBCONTRACTOR, AS THE CASE MAY BE, HAS
7 TIMELY REQUESTED DISBURSEMENT OF PROCEEDS FROM THAT LOAN; AND
8 3. THE LENDER IS LEGALLY OBLIGATED TO DISBURSE SUCH PROCEEDS TO THE
9 OWNER, CONTRACTOR OR SUBCONTRACTOR, AS THE CASE MAY BE, BUT HAS FAILED
10 TO DO SO IN A TIMELY MANNER.
11 S 756-E. EXCEPTIONS FOR LOWER MANHATTAN RECONSTRUCTION. THE PROVISIONS
12 OF THIS ARTICLE SHALL NOT APPLY TO ANY CONSTRUCTION CONTRACTS FOR THE
13 RECONSTRUCTION, ALTERATION, MOVING OR DEMOLITION OF ANY BUILDING, STRUC-
14 TURE OR IMPROVEMENT, OR RELATING TO THE EXCAVATION OF OR ANY DEVELOPMENT
15 OR IMPROVEMENT TO LAND IN AND AROUND THE WORLD TRADE CENTER NECESSITATED
16 BY THE SEPTEMBER ELEVENTH, TWO THOUSAND ONE TERRORIST ATTACK ON SUCH
17 CENTER.
18 S 757. VOID PROVISIONS. THE FOLLOWING PROVISIONS OF CONSTRUCTION
19 CONTRACTS SHALL BE VOID AND UNENFORCEABLE:
20 1. A PROVISION, COVENANT, CLAUSE OR UNDERSTANDING IN, COLLATERAL TO OR
21 AFFECTING A CONSTRUCTION CONTRACT, WITH THE EXCEPTION OF A CONTRACT WITH
22 A MATERIAL SUPPLIER, THAT MAKES THE CONTRACT SUBJECT TO THE LAWS OF
23 ANOTHER STATE OR THAT REQUIRES ANY LITIGATION, ARBITRATION OR OTHER
24 DISPUTE RESOLUTION PROCEEDING ARISING FROM THE CONTRACT TO BE CONDUCTED
25 IN ANOTHER STATE.
26 2. A PROVISION, COVENANT, CLAUSE OR UNDERSTANDING IN, COLLATERAL TO OR
27 AFFECTING A CONSTRUCTION CONTRACT STATING THAT A PARTY TO THE CONTRACT
28 CANNOT SUSPEND PERFORMANCE UNDER THE CONTRACT IF ANOTHER PARTY TO THE
29 CONTRACT FAILS TO MAKE PROMPT PAYMENTS UNDER THE CONTRACT.
30 S 758. SEVERABILITY. IF ANY CLAUSE, SENTENCE, PARAGRAPH, SUBDIVISION
31 OR PART OF THIS ARTICLE, OR THE APPLICATION THEREOF TO ANY PERSON OR
32 CIRCUMSTANCE, SHALL BE ADJUDGED BY ANY COURT OF COMPETENT JURISDICTION
33 TO BE INVALID OR UNCONSTITUTIONAL, SUCH JUDGMENT SHALL NOT AFFECT,
34 IMPAIR OR INVALIDATE THE REMAINDER THEREOF, BUT SHALL BE CONFINED IN ITS
35 OPERATION TO THE CLAUSE, SENTENCE, PARAGRAPH, SUBDIVISION OR PART OF
36 THIS ARTICLE, OR IN ITS APPLICATION TO THE PERSON OR CIRCUMSTANCE,
37 DIRECTLY INVOLVED IN THE CONTROVERSY IN WHICH SUCH JUDGMENT SHALL HAVE
38 BEEN RENDERED.
39 S 3. This act shall take effect on the one hundred eightieth day after
40 it shall have become a law and shall apply to construction contracts
41 entered into on or after such date unless the construction contract is
42 entered into as part of a construction project for which a permit or
43 permits have been issued and work has begun on such projects prior to
44 the effective date of this act.
.SO DOC A 11526B *END* BTXT 2001
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