New York's 5 Percent Retainage Law Underscores Construction Contract Drafting

Litigation attorneys Gina Fonte, Robert Bernstein and Jeanne Harrison co-authored an article in The Real Estate Finance Journal discussing New York Gov. Kathy Hochul's signing of Senate Bill S3539, amending the state's General Business Law to limit retainage on private construction contracts over $150,000 to 5 percent. The changes, which apply to contracts starting from Nov. 17, 2023, highlight the need for stakeholders in the construction industry to reassess and modify their standard contracts and operational practices to ensure compliance. The authors stress the importance of clear contractual provisions to manage the undefined aspects of the law, highlighting proactive risk management.

The authors also published a Holland & Knight client alert on this topic earlier this year.

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