SECTION OVERVIEW AND POLICIES

This section outlines the procedures agencies should follow to approve the assignment of contract payments to an individual or entity other than the original contract holder. Payment assignments are commonly due to financing arrangements or to fulfill liabilities to subcontractors or other creditors of the contract.

According to the New York State Lien Law (Article 2, Section 15), payment assignments only become valid when (i) an appropriate “Notice of Assignment” is submitted to the originating agency and the Office of the State Comptroller (OSC) within 20 days of the date of assignment, and (ii) the originating agency approves the payment assignment.

According to New York State Lien Law (Article 2, Section 25), every assignment of moneys, or any part thereof, due or to become due under a public improvement contract shall affirmatively state that the assignor (owner) will hold in trust sufficient moneys to be first applied to the payment of trust claims as defined in section seventy-one of the lien law, and apply such moneys to such payments only, before using the moneys for any other purpose. "Trust claims" means claims of contractors, subcontractors, architects, engineers, surveyors, laborers and materialmen arising out of the improvement, for which the owner is obligated, and also means any obligation of the owner incurred in connection with the improvement for a payment or expenditure defined as cost of improvement.

Process and Document Preparation:

Payment assignments redirect all, or a designated portion of, payments due under a contract from the contractor to another entity (payment assignment form). The contractor continues to fulfill all responsibilities under the contract, but assigns their right to payment to another entity.

OSC’s Bureau of State Expenditures' Offset Unit must approve the payment assignment before payment can be made to a new payee. When payment assignments are sent directly to OSC, the Offset Unit will notify the appropriate agency of all assignments filed and will provide the agency with a document that includes the following:

• Assignor name and address
• Assignee name and address
• Date of assignment
• Contract number
• A response due date
• A section for the agency manager to review the assignment and to advise the Offset Unit on the purpose of the assignment.

Agency managers are required to consent to the payment assignment before OSC takes any action. Agencies should respond to the Offset Unit by the date provided on OSC’s correspondence. The Offset Unit will suspend any payments due on the contract until the agency responds on the appropriateness of the payment assignment.

The agency manager should respond, in writing, that the agency:

• accepts the payment assignment;
• rejects the payment assignment (include a statement explaining the reason why); or
• did not receive the payment assignment within 20 days of the assignment as required by law.

Agencies should reply in writing to:

NYS Office of the State Comptroller
Bureau of State Expenditures - Offset Unit
110 State Street - 10th Floor
Albany, NY 12236

If the agency manager rejects the payment assignment, or did not receive the payment assignment by the required date, the Offset Unit will release to the contractor any monies held and will notify the assignor that the payment assignment was not properly filed or accepted. As appropriate, the assignor will be directed to contact the contracting agency for further information. When an agency receives a payment assignment from an entity other than OSC, the agency should notify OSC’s Offset Unit to begin processing the assignment.

For payment assignment and lien questions, please contact:

NYS Office of the State Comptroller
Bureau of State Expenditures - Offset Unit
110 State Street - 10th Floor
Albany, NY 12236
(518) 473-5687

For contract assignment questions, please contact:

NYS Office of the State Comptroller
Bureau of Contracts
110 State Street - 11th Floor
Albany, NY 12236
(518) 474-6494

Guide to Financial Operations

REV. 07/06/2021