Deborah Griffin, Senior Counsel, is based in our Boston office
An increasing number of state legislatures have adopted laws regulating retainage on private construction projects or amended laws already on their books. These laws regulate such issues as the following:
- amount of retainage
- timing of payment
- imposition of interest
- surcharges and attorneys' fees for late payments
- ability of the parties to vary the statutory provisions by agreement
Some states address none of these issues; some states treat a set but not all of these issues; other states have comprehensive statutes addressing all of them and more.
State Regulations Vary Greatly
Inevitably, there is great variability in the approaches the state legislatures take. For example, one approach to regulating the amount of retainage is to establish a numerical cap on the permissible percentage of retainage that parties can withhold. Another approach limits the retainage a prime contractor can hold from subcontractors by reference to the retainage held by the owner from the prime contractor. Others expressly permit a prime contractor to withhold retainage from subcontractors even if the owner withholds none. Some states prescribe different rules depending on whether a contractor has posted a performance bond or other performance security. Several states permit the parties to modify statutory limits by agreement while other explicitly prohibit such modifications.
The range of approaches to regulation of retainage is so broad, and the statutes change so frequently, that it is a constant challenge to stay abreast of the variations and amendments.
This survey captures a snapshot of the state statutes regulating retainage on private construction contracts as of the end of 2011. It includes a summary of each state that has adopted such a statute and a link to each state's legislative website. Click here to access the 50-state survey.
This survey was conducted by Holland & Knight's Construction Industry Practice Group.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
