Keeping Abreast Of Payments Made To Your Customer

Written By: Randy J. Heller


One of the difficulties of being a subcontractor is waiting for payment from its customer -- the prime contractor. Subcontracts often require the subcontractor to wait to be paid until after the prime contractor has been paid.  Even though “pay when paid” clauses are theoretically unenforceable in New York, the fact of the matter remains, it is highly unlikely that a prime contractor is going to advance payment to its subcontractor before it has received money from the owner.
But if things were not bad enough, how does a subcontractor even know when the prime contractor has been paid by the owner? It is not something prime contractors advertise, and they often lie about it, to delay payment to the subcontractor.

NYS Prompt Payment Act 

A little-known provision in the NYS Prompt Payment Act (General Business Law §756-a) permits a subcontractor to make a written request of the owner to provide notice to the subcontractor within five days of making any interim or final payment to the prime contractor. A notice given at the outset of the job remains in effect for the entire duration of the subcontractor’s work on the project. §756-a (4). 
This written request can be combined with a demand upon the owner for the terms of the prime contract pursuant to §8 of the New York Lien Law. The terms of the prime contract are often concealed from the subcontractor—even where it is incorporated by reference into the subcontract and made binding upon the subcontractor.
Please contact us if you would like a copy of a suitable form of demand upon the project owner.

about the authors

Randy J. Heller


For over forty years, Mr. Heller has specialized in construction law and litigation, representing some of the largest and most successful contractors in the nation.

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