Alterations to New York law will notably impact the retainage withheld in private construction contracts. As of Friday, November 17, 2023, a new bill was signed into law by Governor Hochul, putting a cap on the retainage held on construction contracts for private improvements. >/p>
This alteration in legislation mandates that the retainage is limited to 5% of the contract price from the inception of the project. It applies to both an owner’s withholding of retainage from a contractor and a contractor’s retainage withheld from subcontractors.
This significant legal modification was brought to life by Rivkin Radler LLP, a renowned law firm that specializes in a broad range of legal practices.
Legal professionals working in corporations and law firms need to pay attention to this law as it imposes a new burden on contracting parties to reevaluate their terms of agreement, particularly in the private construction sector.
The long-term impacts of these changes are yet to be seen but, the implications could be large-scale. This statute has the potential to influence private construction contracts nationally, as lawmakers in other states often look to New York as a model for legislative changes.
The legal fraternity is urged to monitor how these changes play out and the precedents it sets. Legal experts need to stay attuned to these adjustments and what they could mean for private construction contracts in the next few years.