Assembly bill A05023, if passed, would require owners to deposit retainage sums into an escrow based interest bearing account. The law would allow owners to keep the security of retainage until the project is complete and signed off on but would also allow the subcontractors whose money is being withheld (the retainage) to earn interest so that it is worth a bit more to them when they finally receive it. The law would provide that retainage earns interest at the rate of 1 percent per month. If the law is successful, that means that retainage might be a more valuable investment than the stock market!
This proposal has failed in the senate before so stay tuned to see if it makes its way into law this year.
Vincent T. Pallaci is a partner at the New York law firm of Kushnick Pallaci, PLLC where his practice focuses primarily on the area of construction law. He can be reached at (631) 752-7100 or vtp@kushnicklaw.com
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