Legal Question in Construction Law in New York

Re: Retainage payments

There are two different versions of the Prompt Payment Act. It makes a difference if this is a public school or a private school. New York has law--judge-made law--on the subject of "Pay When Paid" or "Pay If Paid" clauses and it is not simple to explain in the abstract.

The first place to look is, of course, the subcontract itself. You also need to look at the prime contract between the school and the GC. How the contract terms interact with the law is something that one would have to figure out only after seeing the contracts.

The general rule is that the release of retainage is tied to substantial completion. However, the contract terms can (and in the case of NYC SCA Contracts, they certainly do) make major adjustments in these and other terms.

You should bear in mind that your backup solutions come out of the Lien Law--by filing a notice of lien, or a claim under the Lien Law Trust Fund provisions (or both). In addition, if it is a public project, there is a right to file notices with the public agency that will give you notice of what is happening with respect to completion of the project and retainage generally. This is important because your ability to lien a public project depends on there being some earmarked public fund that has not been paid out to the contractor yet. Do not forget, also, that there should be a surety bond filed to protect your right to be paid, and it is important to preserve your rights against the bond.

All of these things are subject to some fairly short and strictly enforced time limits.

Hence I encourage you to speak with an attorney sooner rather than later to protect your rights. You can write back to me offlist at [email protected].

This message is not legal advice and should not be relied upon unless a written engagement letter is entered into with the undersigned.