Construction Law Blog

Legislative Update for the New York Contractor, Part 2 of 3

Each year the New York State Legislature enacts dozens of new statutes, which alter various phases of construction. Currently, there are numerous proposed bills that may impact New York contractors and subcontractors in the next year.

Some of the significant proposed changes include allowing the contractor to stop performance upon outstanding change orders, new escrow deposit requirements to cover damage to neighboring properties, new owner ability to deposit retainage funds in escrow and requirements prohibiting home improvement contractors from working on behalf of mortgage companies.

1. Bill S03414        "An act to amend the state finance law in relation to contract change orders."
   
   Under this proposed bill, during the course of construction, where the total cost of all unapproved change orders exceed 10% of the original contract (or subcontract) amount, the contractor (or subcontractor) shall not be required to commence or continue the work until the proposed changes have been approved by the public owner.
   
   
2. Bill S00991      "An act requiring developers to deposit a portion of the total estimated project cost into escrow account for damage caused to neighboring properties and for work on a project to be stopped until repairs are made to adjoining properties."
   
   This bill seeks to amend the administrative code of the City of New York to require developers to deposit 10% of the total estimated project cost in an escrow account, used to settle claims of property owners whose property is damaged during any construction or the claim of tenants who are displaced.
   
   "A developer shall be held strictly liable for any damage or relocation expense that occurs as a result of the construction. If any damages occur to an adjoining property, any and all work on such project shall be stopped until such damaged property is repaired."
   
   
3. Bill A00903       "An act requiring contractors in certain cities to recycle construction and demolition site waste."
   
   This bill will require contractors in cities having a population of one million or more to recycle 50% of the waste generated on construction and demolition sites. This bill defines the types of projects that would be subject to this recycling requirement, the phase-in period, as well as providing penalties for violations.
   
   
4. Bill S03189         "An act allowing an owner to retain reasonable amounts of the contract as retainage by depositing same in a separate interest bearing escrow account with a third party escrow agent."
   
   This bill will provide, by mutual consent of the parties, the ability of the owner of any non-public construction project to deposit into a third party escrow account a 'reasonable amount' of the contract sum. The third party escrow agent is to release the retainage, upon owner's written authorization, no later then 30 days after final approval of the work.
   
   
5. Bill A0193           "An act prohibiting home improvement contractors from acting on behalf of mortgage brokers."
   
   In an effort to prevent home improvement contractors from coercing people to obtain loans for what are often unnecessary repairs, this bill seeks to shield the buyers and hold the sellers accountable. This bill also seeks to prevent the making of secondary mortgages for these types of home improvements as they can cause a loss in home ownership.
   
   Your comments are invited in the field below.

1. The author, John Caravella Esq., is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email: John@LIConstructionLaw.com or (516)462-7051
   
   
   

This is a general information article and should not be construed as legal advice or a legal opinion.  Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.