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Southeast HVAC News Guest Column

Retainage

by Stuart S. Zisholtz, Esq.
On many construction projects, a contractor submits a monthly requisition for payment. Incorporated into the requisition is a reduction of the amount due to be held as retainage. Retainage is defined as money that is due to the contractor, but held essentially, for security purposes to be released as the end of the project.

In the event the contractor defaults or fails to complete certain work, the owner may be permitted to utilize the retainage held back from the contractor in order to complete the necessary work. Many times a contractor who performs work early on in the project is forced to keep its retain age with the owner until such time as there is a release of the retainage towards the end of the project. This could be a short period of time, or, in other instances, years before the retainage is released.

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Recently, New York Governor Andrew Cuomo, signed into law an amendment to the Lien Law which addresses unpaid retainage. Specifically, the Lien Law was amended to allow for Mechanicís Liens to be filed for unpaid retainage within ninety (90) days after retainage is due to be released. This law is a significant extension of the lien rights of the subcontractors. Before, a contractor was entitled to lien a project eight months after it last performed work or furnished materials. Now, it may file a Mechanicís Lien for unpaid retainage years after it performed work or furnished materials.

The amendment only pertains to private construction projects. It does not pertain to public improvement work. When addressing public improvement work, a contractor may file a Mechanicís Lien within thirty (30) days after the project is completed and accepted by the public owner. This time frame could be years after the contractor performed its work or furnished materials. The key component to this Amendment to the Lien Law is the fact that a private construction project can have a Mechanicís Lien filed well after the eight month period of time.

Never let your lien time run out!! 

For a free copy of a pamphlet pertaining to mechanics liens and payment bond claims, kindly contact me or the Association.


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