On November 17, 2023, Governor Kathy Hochul signed Senate Bill S.3539/A.4167, which has since been referred to as the “5% Retainage Bill” (the “Bill”). Aimed at reducing the amount of retainage that can be withheld on private construction projects, the Bill amends the General Business Law to provide that no more than 5% of the contract sum can be withheld as retainage from a contractor or subcontractor on a construction project.
The Bill comes with a few important considerations:
- Retainage must be released by the owner to the general contractor no later than thirty days after the final approval of the work under the construction contract.
- Failure to release retainage as required by the Bill, will subject the owner, general contractor or subcontractor to interest of one percent per month from the date the retention was due and owing.
- The Bill applies to contracts entered into on or after the effective date of November 17, 2023.
Meltzer Lippe is well versed in legislative developments related to construction laws. Owners, general contractors and subcontractors will need a trusted advocate to help ensure compliance with the new Bill. If you have questions relative to the foregoing, you are encouraged to reach out to your Meltzer Lippe advisor or contact Manny A. Frade or Adam Wald at Meltzer, Lippe, Goldstein & Breitstone, LLP.