Bill Text: NY S03180 | 2011-2012 | General Assembly | Introduced

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Bill Title: Provides for a reasonable amount of construction contract sum to be deposited in a separate interest bearing escrow account with a third party escrow agent; provides further that the owner shall be subject to the payment of interest, in addition to the escrow interest, at the rate of one percent per month and the contractor or subcontractor shall be subject to payment of interest on the amount of retainage it holds at the rate of one percent per month.

Spectrum: Partisan Bill (Republican 3-0)

Status: (Introduced - Dead) 2012-01-04 - REFERRED TO CONSUMER PROTECTION [S03180 Detail]

Download: New_York-2011-S03180-Introduced.html

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                           S T A T E   O F   N E W   Y O R K
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           S. 3180                                                  A. 5023
                              2011-2012 Regular Sessions
                             S E N A T E - A S S E M B L Y
                                   February 10, 2011
                                      ___________
       IN  SENATE  --  Introduced by Sens. DeFRANCISCO, JOHNSON, O'MARA -- read
         twice and ordered printed, and when printed to  be  committed  to  the
         Committee on Consumer Protection
       IN ASSEMBLY -- Introduced by M. of A. CUSICK -- Multi-Sponsored by -- M.
         of A. GUNTHER, HOOPER, MAGEE, PHEFFER -- read once and referred to the
         Committee on Economic Development
       AN  ACT  to  amend the general business law, in relation to retention of
         construction contracts
         THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section  1.  Section  756-c  of  the general business law, as added by
    2  chapter 127 of the laws of 2002, is amended to read as follows:
    3    S 756-c. Retention. By mutual agreement of  the  relevant  parties  an
    4  owner  may retain a reasonable amount of the contract sum as retainage[.
    5  A]  AND FOR ANY CONSTRUCTION CONTRACTS, EXCLUDING CONSTRUCTION CONTRACTS
    6  FINANCED BY A PUBLIC BENEFIT CORPORATION, SUCH RETAINAGE SHALL BE DEPOS-
    7  ITED IN A SEPARATE INTEREST BEARING ESCROW ACCOUNT WITH  A  THIRD  PARTY
    8  ESCROW  AGENT.  AS  OF  THE  TIME  OF  THE DEPOSIT OF THE RETAINAGE, THE
    9  RETAINED FUNDS SHALL BECOME  THE  SOLE  AND  SEPARATE  PROPERTY  OF  THE
   10  CONTRACTOR.  INTEREST  ON THE RETAINED FUNDS SHALL ACCRUE AT AN INTEREST
   11  RATE AT LEAST EQUAL TO THE PREVAILING INTEREST RATE PAID ON DEPOSITS  BY
   12  THE  ESCROW AGENT. ALSO, A contractor or subcontractor may [also] retain
   13  a reasonable amount for retainage so long as the amount does not  exceed
   14  the  actual  percentage  [retained]  DEPOSITED  IN  ESCROW by the owner.
   15  [Retainage] THE ESCROWED RETAINAGE shall  be  released  by  the  [owner]
   16  OWNER'S  WRITTEN  DIRECTION  TO THE ESCROW AGENT TO DELIVER THE ESCROWED
   17  RETAINAGE to the contractor no later than thirty days  after  the  final
   18  approval of the work under a construction contract. In the event that an
   19  owner  fails to release THE ESCROWED retainage as required by this arti-
   20  cle, or the contractor or subcontractor fails to release a proportionate
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD05175-01-1
       S. 3180                             2                            A. 5023
    1  amount of retainage to the  relevant  parties  WITHIN  FIVE  DAYS  after
    2  receipt  of  THE  ESCROWED  retainage  from  the  owner, (I) the owner[,
    3  contractor, or subcontractor, as the case may be, shall  be  subject  to
    4  the payment of interest at the rate of one percent per month on the date
    5  retention  was  due and owing] SHALL BE SUBJECT TO THE PAYMENT OF INTER-
    6  EST, IN ADDITION TO THE ESCROW INTEREST, AT THE RATE OF ONE PERCENT  PER
    7  MONTH  COMMENCING  ON THE DATE THE RETAINAGE WAS DUE TO BE RELEASED FROM
    8  ESCROW; AND (II) THE CONTRACTOR OR SUBCONTRACTOR, AS THE  CASE  MAY  BE,
    9  SHALL  BE  SUBJECT TO THE PAYMENT OF INTEREST ON THE AMOUNT OF RETAINAGE
   10  IT HOLDS AT THE RATE OF ONE PERCENT PER MONTH COMMENCING ON THE DATE THE
   11  RETAINAGE WAS DUE TO BE RELEASED BY SUCH CONTRACTOR OR SUBCONTRACTOR.
   12    S 2. This act shall take effect immediately and  shall  apply  to  all
   13  contracts entered into on or after such effective date.