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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 Mechanic’s 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 Mechanic’s 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 Mechanic’s 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 Mechanic’s 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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