New York Construction Contracts Need to Cover All Bases

Staying legal in the New York construction contracting business begins with licensing. New York State licenses only asbestos contractors. But that doesn’t make licensing a trivial issue in New York. Cities and counties in New York are free to require a license for any type of construction activity. And many municipal governments do exactly that. For example, New York City licenses home improvement contractors. A word to the wise. Don’t sign a contract or begin work without a license. New York State may be a little casual about licensing of contractors. But New York courts are ruthless in enforcing licensing laws. Where a contracting license is required, unlicensed contractors may have no right to collect for work completed.But even if you don’t need a license, New York State jumps with both feet into your construction contracts. You need to know about several statutes.If you do commercial work, New York General Business Law § 756-a supplies any key terms omitted from you contracts or subcontracts. If you don’t cover payment dates, validity of invoices, grounds for disapproval of an invoice, grounds for stopping work or construction delay, or several other topics, the legislators in Albany step right in to fill the gap.How thoughtful! But that’s not enough. New York General Business Law Section 756-b sets penalties for violation of Albany’s contract terms – maybe not want you wanted at all. Better that your contracts reflect what you intend rather that what Albany prefers. It’s easy to keep New York Business Law 756-a out of your contracts. Just be sure your agreements cover all the bases.New York General Business Law, Section 771 is even more explicit on what has to be in residential construction, home improvement and home repair contracts.
(1) The name, address, telephone number and license number, if applicable, of the contractor.
(2) The dates when work will begin and be completed, including any contingencies that could delay completion.
(3) A description of the work including makes and model numbers
(4) A disclosure in bold type that subs and suppliers have lien rights.
(5) A notice to that contractor has to deposit payments in a trust account or supply other security for payment of sub contractors and suppliers.
(6) A progress payment schedule by job phase in dollars and cents.
(7) A 3-day right to cancel.
For technical violations, the penalty is $100. For substantial violations, the penalty is the greater of $250 or 5% of the contract price up to $2,500.
New York General Business Law, Section 771 also requires the same information in every amendment to a residential construction, home improvement and home repair contract. That makes for some real lengthy change orders.