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New York Waivers

New York Waivers


  • Lien rights cannot be effectively waived in a contract, before performing any work.
  • A pay-if-paid clause does not waive lien rights.
  • The waiver provisions do not apply to a written agreement to subordinate, release or satisfy all or a part of a lien made after the lien has been filed. 
    Lien Law §34.
  • A contract governed by the law of another state, that permits the waiver of the right to file a lien, will not be enforced in New York.
  • "Paid if Paid" is not enforceable in New York
  • "Pay when Paid" suggests time for payment.
  • Pay-when-paid clause in the subcontract or purchase order does not create a condition precedent to payment.

Retainage Provisions

Public

  • Contractor: The public owner shall retain not more than five per centum of each progress payment to the contractor except that the public owner may retain in excess of five per centum but not more than ten per centum of each progress payment to the contractor provided that there are no requirements by the public owner for the contractor to provide a performance bond and a labor and material bond or both in the full amount of the contract. N.Y. STATE FINANCE LAW§ 139-f(1); N.Y. GENERAL MUNICIPAL LAW§ 106-b(1).

    Subcontractor: The contractor shall not retain more than five per centum of each payment to the subcontractor and/or materialman except that the contractor may retain in excess of five per centum but not more than ten per centum of each payment to the subcontractor provided that prior to entering into a subcontract with the contractor, the subcontractor is unable or unwilling to provide a performance bond and a labor and material payment bond, both in the full amount of the subcontract, at the request of the contractor. N.Y. STATE FINANCE LAW§ 139-f(2); N.Y. GENERAL MUNICIPAL LAW§ 106-b(2).

    Thus, unless the contractor asks for a performance bond and a labor and material payment bond prior to entering into the subcontract (and presumably pays for the same), the contractor cannot retain more than 5 percent.

Private

  • By mutual agreement of the parties, an owner may retain a reasonable amount of the contract sum as retainage. A contractor or subcontractor may also withhold retainage so long as that amount does not exceed the amount withheld by the owner. Retainage shall be released no later than 30 days after the final approval of the work under the contract. Late payments accrue interest at a rate of 1 percent per month. N.Y. GENERAL BUSINESS LAW § 756-C..