In 1975, with the support of the Empire State Subcontractors Association, STA embarked on a legislative program that has successfully produced 40 laws to protect and improve the economic well-being of its members. The very first piece of legislation made it illegal for any contract to contain a ‘waiver of lien’ on either public or private jobs. Subsequent legislation throughout the years further enhanced the lien process. Other legislative victories addressed such issues as Prompt Pay and Timely Requisitions for Contingent Payment. STA submitted briefs in support of the Court of Appeals’ decision on the abolishment of the “pay if paid” clause and supported the legislation for the Workers’ Compensation Reform to allow for payment based on “Hours Worked” as opposed to salary.

STA continues to propose legislation that would require owners to put retainage into interest bearing escrow accounts and seeks to modify the Safe Place to Work Law (240/241) to permit a negligence standard. STA is working full time in Washington, Albany, and New York City to effect legislative change that benefits subcontractors. As STA continues to press for legislative change at all levels of government, it is proud of its victories: 

Legislative Victories

• Ban On Waiver of Mechanic’s Lien

It is illegal for any contract to contain a waiver of lien provision on either public or private jobs.

• Ban On Broad Form Hold Harmless

Subcontractors and suppliers cannot be compelled to agree to hold harmless and indemnify GCs and owners whether public or private jobs against their negligence.

• Anti-Wrap Up Insurance

Owners or contractors can no longer compel a subcontractor or supplier to buy his insurance from a source other than that of his choice. Subs can no longer be back-charged on public or private jobs in the event an owner chooses to purchase blanket insurance to cover all trades on a job.

• Completed Job Notification

Enables a subcontractor or materialman to demand written notification from a public owner as to the date when the contract has been determined completed and accepted. Since a lien on public job can be filed at any time within 30 days after completion and acceptance of the project, a sub or materialman would be alerted on his last chance to file a lien.

• Lien Filing Information

This requires that the name of the owner of the real property and the name of the building (if different) and a legal description of the real property (on private jobs) be given on each construction contract and subcontract agreement. During construction, the contractor and subcontractor must be notified of any change.

• Payment/ Retainage

Contractor may hold no more that 5% retainage from subcontractors on progress payments when performance and payment bonds are provided. Law requires contractors to pay subs within 15 days after the contractor receives payment from public owners.

• Recovery of Interest and Fees in Bond Claims

Law authorizes a judge to compensate subcontractors and suppliers who recover on public improvement action against a labor and material payment bond by allowing the recovery to include interest. The recovery may also provide reasonable attorney’s fees when the court feels that the claim or defense against the bond was frivolous.

• Extension of Payment Bond Filing Time

Law extends the time period for a second tier sub to file a notice against a payment bond to 120 days (similar to the lien period) and allows a sub to initiate a suit up to one year from the time his payment becomes due on private or public jobs.

• Sub to Be Paid Percentage of Work Completed

This requires contractors to pay the subcontractors the amount received from the public owner. The contractor is required to pay the subcontractor the amount representing that portion of the sub’s work that has been completed and accepted.

• Private Job Payment Bonds to Be Filed

When the cost of construction on a private project exceeds $10,000, you are required to file copies of payment and performance bonds with the County Clerk’s Office in the county where the job is done.

• Intermediate Hold Harmless

Prohibits the use of “hold harmless” agreements wherein owners and general contractors require subcontractors to indemnify them for partial negligence of such owners and contractors.

• Extension of Lien Filing Time

This extends the lien filing period on private work from the previous four months to eight months from the last performance of work or furnishing of materials. The four-month period continues to apply to single family dwellings. Note: The eight-month lien period applies only if the owner’s construction contract was entered into after Sept. 1, 1982.

• Timely Requisition Required for Contingent Payments

Law prevents a contractor from claiming a contingency payment contract clause “the sub gets paid only if and when the contractor is paid by the owner” as a defense to a demand for payment by a subcontractor, where the contractor has failed to requisition final payment within 90 days of substantial completion of public job.

• Prompt Payment

Law requires state agencies and the Comptroller’s Office to make contract payments within 45 days (period reduced to 30 days in 1988), or face an interest payment that would be charged to the responsible agency.

• Plan Deposit Refund

This allows non-bidders and subcontractors who don’t bid directly with the public owner to recoup deposit less the actual cost of reproduction if the plans are returned in good condition.

• Interest On Diverted Trust Funds

This provides for payment of interest on diverted trust funds and that a trustee or transferee shall be liable for interest on funds diverted for public or private jobs.

• Individual Claims Replace Previous Class Action

Based on this law, claimants are now allowed to maintain a class action regardless of the number of claimants in public or private jobs.

• Trust Fund Rights Extended

This extends the time period subs may file claim under trust provisions of lien law for public and private jobs.

• Time Period Established for Subs to Obtain Contract Information

This provides for a 30-day time period within which a construction owner must provide a sub or supplier the terms of his contract with the prime contractor.

• Eight Month Lien Filing Period

This clarifies the Lien Law as to when the eight-month period applies as opposed to the four-month period. Law provides an eight-month filing period for liens by subs and suppliers when performing work for housing developers.

• Amendment of Lien Law in Relation to Continuing a Mechanic’s Lien

This amends the Lien Law in relation to continuing a mechanic’s lien on a public improvement lien by filing an extension thereto.

• Interest Pass Through On Late Payments

This requires interest pass through on late payment from the state to primes.

• Subcontractor Prompt Payment

The amends section 139-f of the State Finance Law. This added teeth to the 15-day period between prime contractors and subcontractors on state projects by asserting interest penalties against prime contractors who fail to pay within 15 days.

• Amendment of Section 11-b of The Lien Law

This amendment allows the mandatory service of a copy of the notice of lien to the contractor to be made either simultaneously with the filing of such notice with the County Clerk or within 30 days thereafter.

• Service of Lien by Mail

This law enacted in 1991 amended section 11 of the Lien Law. It made it clear that lienors may choose from a number of alternative methods of serving a copy of the notice of lien upon the owner in the first instance, without first having to attempt personal service.

• Amendment of The Lien Law as It Relates to The Industrial Development Agency

This new law permits subcontractors and suppliers the right to file a lien against projects financed through the Industrial Development Agencies.

• Prompt Pay

Passed in 1992, this act amends the general municipal law related to providing interest to contractors upon late payment by a public owner and providing interest to subcontractors and materialmen upon late payment by a contractor.

• Prompt Pay Law – Permanent

This new law has reduced the payment period of 45 days to 30 days with some exceptions. The law now requires local governments which includes cities, counties, towns, villages and school district to pay interest on payments made later than 30 days after the contractor has submitted an ‘approval requisition’ for payment.

• Hold Harmless Technical Corrections Bill

This bill made a technical correction to clarify subdiv. 1 section 5-322.1 of the General Obligations Law which was causing confusion due to an error in the original wording.

• Lien Law Made More “User Friendly”

The new law allows subcontractors and suppliers to serve a copy of the Notice of Lien on the owner and/or contractor up to five days prior to filing the Notice of Lien in the County Clerk’s Office or with the public owner. The lienor can now mail their Notice of Lien to the owner and/or contractor at the same time the lien is mailed to the County Clerk or public owner.

• Extends Duration of Public Lien (Section 18 Lien Law)

Extended the duration of public improvement liens from six months to one year. Also established a limit on the number of extensions of both private and public improvement liens which are allowed.

• Lien Discharge Undertakings (Section 21 Lien Law)

Sets the amount of an undertaking required to discharge a lien at 100% of the lien amount. Prior to enactment of this law, undertakings to discharge liens (usually in the form of a bond), were required to be set by a judge with or without a stipulated agreement between the surety providing the bond and the lienor. This eliminates the time and expense of this procedure by setting the amount of the undertaking at 110% of the lien amount.

• Technical Amendment – Duration of Public Lien (Section 21 Lien Law)

Makes Section 21 of the Lien Law consistent with Section 18 of the Lien Law, as amended by ESSA in 2000, which extended the duration of public improvement liens from six months to one year.

• Modifies The Miller Act to Provide 100% Payment Bond

On the Federal level modification of the Miller Act established in 1993, which provided 100% performance bond but only $2,500,000 for a payment bond. Effected January 1, 2003, we were able to modify the Miller Act to provide 100% performance bond and 100% payment bond for all subcontractors and suppliers. The Miller Act had not been updated since 1933. The 1993 amendment was signed by Bill Clinton.

• Payment Bond On Hybrid Projects (Section 5 Lien Law)

Requires payment bonds or other forms of security to be posted by owners on certain “hybrid” construction projects valued at more than $250,000, such as those where a private building is constructed on public land.

• Lien Foreclosure Actions

This bill would exempt owners as necessary parties to lien foreclosure actions where the lien has been “bonded off”.

• Payment Bond Precondition (Section 5-322.1 General Obligations Law)

Made contract provisions requiring subcontractors and suppliers to exhaust all lien remedies before initiating legal action against a payment bond against public policy, void and unenforceable.

• Lien On Retainage Law (Chapter 367 Laws of 2011)

Amends Section 10 of the lien Law, and will allow subcontractors to effectively reopen their lien rights on private projects and file a lien for unpaid retainage up to 90 days after the retainage was due to be released.

• Statute of Limitations On Payment Bond Claims (Chapter 380 Laws of 2011)

Amends Section 137 of the State Finance Law. This new law states that the statute of limitations for commencing a payment bond claim begins on the date the public improvement has been completed and accepted by the public owner.

• SCA Bill (Chapter 519 Laws of 2014)

Effectively “preserves” a subcontractor’s right to file a notice of claim against the SCA on an unresolved change order for up to 90 days after the date of payment for the amount claimed was denied by the SCA. Previously, a notice of claim against SCA had to be filed within 90 days after a potential claim was considered “accrued”, which was a vague standard that often resulted in the unjustifiable anomaly of a subcontractor’s claim being time-barred in court, before they realized they had a claim.