By Michael Catania

Last year, Governor Cuomo vetoed a bill that would have standardized the definition and timing of Substantial Completion (“SC”) on public jobs. The bill returned to the governor’s desk this month and . . . .. he signed it!

Was this a Christmas Miracle? Hardly.

While some of the timing language was kept in, Cuomo “secured an agreement with the Legislature to make certain technical changes to the bill, allowing public owner contracts to retain their distinct definition of substantial completion.” Public Owners can continue to define SC in ways that far outreach what is commercially reasonable.[1]  For example, I have recently reviewed specifications that “precondition” SC not just on systems being operational, but fully tested and certified! Some even require the completion of personnel instruction/training. Others go as far as to require final, not temporary, certificates of occupancy. Per their intent, such onerous terms significantly delay Contractors’ ability to achieve SC. This impacts the release of retainage, the assessment of liquidated damages and the length of warranties.

Enough of the bad news. Did the bill help at all? Yes. 

1. Public Owners must now provide prime contractors with a complete punch list no later than 45 business days after substantial completion; and
2. Primes must pass down the punch list to the responsible subcontractors within 7 days thereafter.

Based on these provisions, a contractor in receipt of a punch list can argue SC. After all, under this new legislation the punch list issues only after the Contractor has achieved SC. More importantly, the law describes the punch list as a “written list describing all remaining items to be completed by the contractor.” Hopefully, this will prevent Owners from issuing the all-too-common “rolling” punch lists.

Michael Catania is a Managing Partner with Catania, Mahon & Rider, PLLC and head of the Construction Practice Group.