756-b. Remedies. 1. (a) If any interim or final payment to a contractor is delayed beyond the due date established in paragraph (a) of subdivision three of section seven hundred fifty-six-a of this article, the owner shall pay the contractor interest beginning on the next day at the rate of one percent per month or fraction of a month on the unpaid balance, or at a higher rate consistent with the construction contract.
(b) Notwithstanding any contrary agreement, if any interim or final payment to a subcontractor is delayed beyond the due date established in paragraph (b) of subdivision three of section seven hundred fifty-six-a of this article the contractor or subcontractor shall pay its subcontractor interest, beginning on the next day, at the rate of one percent a month or fraction of a month on the unpaid balance, or at a higher rate consistent with the construction contract.
2. (a) (i) If an owner fails to approve or disapprove an invoice within the time limits established in subparagraph (i) of paragraph (a) of subdivision two of section seven hundred fifty-six-a of this article, or to pay the contractor the undisputed invoice amount within the time limits provided by paragraph (a) of subdivision three of section seven hundred fifty-six-a of this article, the contractor may suspend contractually required performance, only after providing the owner written notice and an opportunity to cure consistent with subparagraph (ii) of this paragraph.
(ii) A contractor intending to suspend performance on the construction contract for failure of the owner to make timely payments or approvals within the time limits provided by this article must provide the owner written notice at least ten calendar days before the contractor's intended suspension. Such notice shall:
(A) inform the owner that payment for undisputed invoice amounts have not been received; and
(B) state the intent of the contractor to suspend performance for non-payment. If after the tenth calendar day following written notice the owner has not cured the deficiency, the contractor may suspend performance.
(iii) A contractor shall not be deemed in breach of the construction contract for suspending performance pursuant to this section.
(b)(i) A subcontractor may suspend contractually required performance if any or all of the occurrences outlined in clauses (A), (B) and (C) of this subparagraph occur and only after providing written notice and an opportunity to cure consistent with subparagraph (ii) of this paragraph:
(A) If an owner fails to make timely payments for undisputed invoices within the time limits established by subdivision three of section seven hundred fifty-six-a of this article for the subcontractor's work and the contractor also fails to pay the subcontractor for the approved work;
(B) If an owner pays the contractor within the time limits established by subdivision three of section seven hundred fifty-six-a of this article for undisputed invoices for work performed by the subcontractor but the contractor fails to make payment to the subcontractor within the time frames established by this article for the subcontractor's work;
(C) If an owner fails to approve or disapprove a portion of contractor's invoice for work performed by the subcontractor within the time limits established in paragraph (a) of subdivision two of section seven hundred fifty-six-a of this article;
(D) If a contractor or subcontractor fails to approve or disapprove a subcontractor's invoice within the time limits established in paragraph (b) of subdivision three of section seven hundred fifty-six-a of this article; or
(E) If an owner fails to approve portions of the contractors' billing for work performed by the subcontractor within the time limits established by this article and the reasons for such failure are not the fault of or directly related to the subcontractor's work.
(ii) A subcontractor intending to suspend performance for failure to receive timely payments within the time limits established pursuant to this article must provide both the owner and the contractor written notice at least ten calendar days before the subcontractor's intended suspension. Such notice shall:
(A) inform the owner and the contractor that payment for undisputed billing amounts have not been received; and
(B) state the intent of the contractor to suspend performance for non-payment.
If after the tenth calendar day following written notice either the owner or the contractor has not cured the deficiency, the subcontractor may suspend performance and/or attempt to resolve in compliance with subdivision three of this section.
(iii) A subcontractor shall not be deemed in breach of the construction contract for suspending performance pursuant to this section.
(iv) (A) A contractor or subcontractor that suspends performance as provided in this section shall not be required to furnish further labor, materials or services until the contractor or subcontractor is paid the undisputed invoice amount at the time period for completion as provided in the construction contract, or a final determination has been made in compliance with subdivision three of this section and complied with. All of the time frames established within this section shall be extended for the length of time performance was suspended. Payment of documented actual costs incurred for re-mobilization resulting from suspension shall be negotiated between the parties.
(B) In the event of suspension of a construction contract, as provided in this article, all materials, equipment, tools, construction equipment and machinery located at the job site shall remain the sole and exclusive property of the contractor or subcontractor and shall be removed from the job site, if necessary, within a reasonable period of time. Access to the contractor's or subcontractor's property shall not be unreasonably withheld.
3. (a) Upon receipt of written notice of a complaint (i) that an owner has violated the provisions of this article; (ii) that a contractor has violated the provisions of this article; (iii) where a contractor alleges a subcontractor has violated the provisions of this article; (iv) where a subcontractor alleges a contractor has violated the provisions of this article; (v) where a subcontractor alleges that another subcontractor has violated the provisions of this article; (vi) where a contractor or subcontractor alleges a material supplier has violated the provisions of this article; or (vii) where a material supplier alleges a contractor or subcontractor has violated the provisions of this article; the parties shall attempt to resolve the matter giving rise to such complaint.
(b) The written notice required under this section shall be delivered at or sent by any means that provides written, third-party verification of delivery to the last business address known to the party giving notice.
(c) If efforts to resolve such matter to the satisfaction of all parties are unsuccessful, the aggrieved party may refer the matter, not less than fifteen days of the receipt of third party verification of delivery of the complaint, to the American Arbitration Association for an expedited arbitration pursuant to the Rules of the American Arbitration Association.
(d) Upon conclusion of the arbitration proceedings, the arbitrator shall submit to the parties his or her opinion and award regarding the alleged violation.
(e) The award of the arbitrator shall be final and may only be vacated or modified as provided in article seventy-five of the civil practice law and rules upon an application made within the time provided by section seventy-five hundred two of the civil practice law and rules.
Last modified: February 3, 2019