New York Construction Law: Recent Compliance Requirements and Legislative Changes

Kenney Shelton Liptak Nowak LLP | Construction Law Update

Karl E. Daniel, Esq., Partner

May 6, 2026

Several significant changes to New York construction law took effect in late 2025 and early 2026, with one additional reform scheduled for April 2026. New York has been among the more active states in this regard, with the Legislature addressing prevailing wage compliance, building electrification, payment practices, litigation procedure, and property access rights in a concentrated span of months.

Contractors, developers, owners, and subcontractors working on public and private projects in New York should be aware of new compliance obligations, amended payment requirements, revised third-party practice rules, and updated property access procedures.

Electronic Certified Payroll Requirements for Public Work Projects

As of December 31, 2025, all contractors and subcontractors performing work on projects covered by Article 8 of the New York State Labor Law must submit certified payroll records electronically through the New York State Department of Labor's MPWR portal. Paper submissions

are no longer sufficient.

The requirement applies to all public work projects subject to prevailing wage obligations under Article 8. Contractors who have not yet registered with the MPWR system or established an electronic payroll workflow should act promptly to comply. Failure to meet certified payroll requirements carries enforcement consequences, including potential debarment from future public work bidding.

Separately, contractors and subcontractors should note that as of December 30, 2024, registration with the New York State Department of Labor is required before submitting bids or performing work on any public work or Article 8-covered project. That registry requirement, now

fully in effect, is a precondition to participation on covered projects.

All-Electric Buildings Act and New Construction Requirements

Effective January 1, 2026, New York's All-Electric Buildings Act imposes new requirements on new construction. Developers and contractors planning projects subject to the Act must ensure that design, permitting, and construction plans account for all-electric systems, as the law prohibits natural gas and other fossil fuel infrastructure in covered new buildings. The scope of the requirements varies depending on building type and occupancy, and developers with projects in the pipeline should confirm whether their specific project falls within the Act's coverage.

Prompt Payment Act Amendments and the Mandatory Retainage Cap

Senate Bill S5655, effective December 19, 2025, amends New York's Prompt Payment Act in two important ways:

●      First, it establishes a hard cap on retainage for private construction contracts valued over $150,000. Any contract provision requiring retainage in excess of 5% is now void as a matter of law. This extends and strengthens the 2023 reform that introduced the 5% limit. Under S5655, parties can no longer negotiate around the cap. Prior to this amendment, there was an argument that sophisticated parties could contractually agree to higher retainage. That argument is no longer available.

●      Second, the amendment sets specific payment timing requirements. Owners must approve or contest an invoice within 12 business days of receipt. Once a contractor receives payment from an owner, that contractor must pay its subcontractors within seven days. These timelines are not aspirational; they have statutory consequences, and contract provisions that attempt to extend them on covered projects will face enforceability questions.

Contractors and owners with form agreements that include retainage provisions exceeding 5%, or payment timing language that conflicts with these requirements, should review and revise those forms.

The AVOID Act and Restrictions on Third-Party Practice in Construction Litigation

The "Avoiding Vexatious Overuse of Impleading to Delay" Act (the AVOID Act) was signed in late 2025 and takes effect April 18, 2026. The legislation imposes new restrictions on the use of third-

party practice (impleader) in construction litigation.

Under existing CPLR practice, a defendant may bring a third-party claim against any party who may be liable for all or part of the plaintiff's claim. In construction cases, this mechanism has frequently been used to implead subcontractors, design professionals, and other downstream parties. The AVOID Act targets what the Legislature identified as the use of impleader primarily as

a delay tactic rather than a genuine liability-shifting mechanism.

The precise scope of the Act's restrictions, including what standards courts will apply to evaluate whether an impleader is permissible, will be worked out in litigation following the effective date. Defendants and their counsel in construction cases should be prepared for more scrutiny of third-party complaints filed after April 18, 2026, and should be able to articulate a substantive basis

for impleader beyond the existence of contractual indemnity obligations alone.

RPAPL § 881 and Modernized Adjoining Property Access Procedures

Senate Bill S3799, effective December 5, 2025, amends Real Property Actions and Proceedings Law § 881, which governs a property owner's right to access neighboring land to perform repairs

or improvements.

The following changes stand out:

●      The amendment clarifies what constitutes a refusal. A neighbor who does not respond to an access request within 60 days is now deemed to have refused. Previously, silence created an ambiguous record and sometimes complicated the pathway to seeking a court-ordered license. The 60-day deemed-refusal rule provides a cleaner trigger for initiating § 881 proceedings.

●      The law now expressly requires "reasonable compensation" to the adjoining property owner for loss of use and enjoyment during the access period. While courts had begun awarding license fees under prior law, the explicit statutory requirement removes uncertainty about whether compensation is available and may affect how courts calculate the appropriate amount.

●      The expanded access rights confirm that the statute applies not only to repairs but to improvements, which is a clarification that broadens the range of projects for which a § 881 license may be sought.

Developers and contractors should account for the updated § 881 procedures, including the 60-day response window and compensation requirement, at the outset of any project requiring

adjoining property access.

Kenney Shelton Liptak Nowak LLP regularly advises contractors, developers, owners, and subcontractors on construction law compliance, contract disputes, and public work matters. For questions about how these developments may affect your projects or agreements, contact our construction law team.