On December 19, 2025, New York amended the “Void provisions” section (General Business Law (“GBL”) § 757) of the New York Prompt Payment Act (the “PPA”) to make clear that any provision in a construction contract subject to the PPA in which the parties agree to withhold retainage in excess of five percent (5%) of the contract sum is void and unenforceable.
New York initially imposed the maximum retainage limit of five percent (5%) of the contract sum (the “5% Maximum Retainage Limit”) by 2023 amendments to the PPA (GBL § 756-c). However, as part of the 2023 amendments, New York did not amend the “Void provisions” section of the PPA to provide that any construction contract provision in contravention of the 5% Maximum Retainage Limit is void and unenforceable.
As discussed in our prior alert regarding the 2023 amendments, the legislature’s failure to amend the “Void provisions” section regarding the then-new 5% Maximum Retainage Limit left open an argument that, pursuant to a broad provision in the PPA entitling parties to vary the provisions of the PPA by contract with certain exceptions, parties could agree to retainage in excess of the 5% Maximum Retainage Limit notwithstanding the 2023 amendments. The 2025 amendment to GBL § 757 now forecloses such an argument and expressly provides that a construction contract provision in which the parties agree to withhold retainage in excess of the 5% Maximum Retainage Limit is void and unenforceable.
If you have questions about the New York Prompt Payment Act amendments, please contact one of our partners: Matthew S. Quinn, at (212) 447-5510 or mquinn@QMlegal.com, Christopher P. McCabe, at (212) 447-5520 or cmccabe@QMlegal.com, Simon Block, at (212) 447-5530 or sblock@QMlegal.com, Jonathan Krukas, at (212) 447-5560 or jkrukas@QMlegal.com, or Eric Thorsen, at (212) 447-5570 or ethorsen@QMlegal.com.
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