Legal Question in Construction Law in New York

Re: Prompt Payment

First of all, you can file a mechanic's lien against a "Public Improvement." The filing requirements are different from those for a private improvement: retain counsel and make sure counsel has a malpractice policy, because it's a tricky area.

Second, there is indeed a Prompt Payment Act for Public Improvements: State Finance Law Section 139-f. If the value of the Project is over $50,000, Payment Bonds for 100% of the contract sum have to be filed. Against these bonds, you have to file a separate claim: a public improvement lien is not enough to trigger the bond.

The law has special provisions governing payments for materials (generally payment for materials and equipment waits until they have been incorporated into the work). Retainage may not exceed 5% unless the Project is exempt from bonding, in which case retainage goes up to 20%.

Under Article XI-A of the State Finance Law, payment is due 30 calendar days (excluding intervening legal holidays(after receipt of a "proper" invoice), except that final payments on highway projects are due 75 calendar days after receipt of the invoice. There are a very few excuses for not making payment, see Subdivision 2 of Section 179-f of the State Finance Law. Contractors have to make payment to Subcontractors within 15 calendar days after receipt of the $$ from the public agency. "Pay when paid" clauses are subject to restrictions are invalidated after 90 days if payment is delayed by the prime contractor's failure to make timely and properly-documented applications for payment.

Nonpayment sets up an interest claim at the rate prescribed by the State Tax Law for overpayments.

The statute does not specifically say that a contractor can suspend performance for nonpayment.

If a State agency is involved and it makes a determination that payment is to be withheld, delayed or conditioned, the aggrieved parties can file an Article 78 Proceeding. Also a tricky area with an INCREDIBLY short statute of limitations...120 days.

I hope this is helpful. This is not an area that lay people should get involved in without assistance of counsel.