New York retainage

Who and what this applies to

Covered private contracts and specified state/public and local public-work contracts.

Thresholds and scope

Private cap: 5% of contract sum for contracts entered on/after November 17, 2023; public rules differ.

The rules

• Private Article 35-E coverage starts at $150,000 aggregate project cost and excludes public work; 1–3-family dwellings; tracts of ≤100 one/two-family dwellings; residential projects ≤4,500 square feet; and qualifying publicly assisted residential projects under 75 units for households averaging 125% of HUD area median income. Source
• Covered private retention is at most 5%, and downstream retention cannot exceed the owner’s actual percentage. Owner release is due within 30 days after final work approval; failures to release required/proportionate retention trigger 1% monthly interest. Source
• The 2023 cap applies to contracts entered on/after November 17, 2023. Source
• Contracts entered on/after December 19, 2025 cannot require covered retention above 5%. Source
• Covered state/public-owner retention is normally at most 5%, or 10% without required full performance/payment bonds. Specified subdivision-4 bond-waiver contracts may permit 20%. Highway Law §38 and federal-preemption exceptions remain. Source
• Local public owners similarly use 5%, or 10% without required full bonds. At substantial completion, requested balance is paid less twice remaining-work value and qualifying unresolved claims/liens/judgments; federal-preemption rules apply. Source

Primary sources

• N.Y. General Business Law §756(1)
• N.Y. General Business Law §756-c
• L.2023 ch.657 §3; S3539 enactment
• L.2025 ch.654; GBL §757(5)
• N.Y. State Finance Law §139-f(1), (3)-(4)
• N.Y. General Municipal Law §106-b(1), (3)

Sources reviewed 2026-09-30. This guide covers the projects and rules stated above.

Back to New York contractor law · Retainage topic guide.