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New York State Passes Legislation on Substantial Completion

Jan 11, 2021

New York State has recently passed legislation which seeks to clarify the meaning of the term “substantial completion” on NYS public projects.   By amending section 139-f of the State Finance Law and section 106-b of the General Municipal Law, this legislation is also designed to prevent public owners from holding retainage for an unreasonable period of time after a project reaches substantial completion—a common problem in the construction industry.

In order to accomplish this goal,  the new legislation will now require a public owner to provide its general contractor with a complete list of all remaining items to be completed by the contractor within forty-five days from the date a public project reaches substantial completion.  In turn, not later than five business days after receiving the punch list from the public owner, the general contractor will now be required to submit, to each subcontractor from whom the general contractor is holding retainage, a written list of all remaining items to be completed by the subcontractor.

By clarifying the definition of the term “substantial completion,” this legislation eliminates the ambiguities that often result in the punch list procedure being dragged out for many months.  Moreover, measuring from a clear substantial completion date, the new timing requirements will allow contractors, and their subcontractors, to promptly complete remaining work items and close out projects.  Most importantly, this legislation will also reduce the amount of time that project funds are withheld by public owners.