On Nov. 17, 2023, Governor Kathy Hochul signed legislation amending New York’s General Business Law Sections 756-a and 756-c, known as the Prompt Payment Act, to limit the withholding of retainage on private improvement construction projects.

The amended Prompt Payment Act sets the maximum amount of retainage that can legally be withheld on a private improvement project at 5%, a reduction by half of the usual and customary 10% of progress payments that were typically withheld under most construction contracts and subcontracts. However, the amendments to the Prompt Payment Act lack clarity as to when retainage and/or final payment must be released or paid, bringing into question whether the amendments accomplish their intended purpose and, more importantly, how it effects an existing form of construction contract.