ALEXANDRIA, Va. — A reference manual published by the American Subcontractors Association, Retainage Law in the 50 States, is helping construction subcontractors understand retainage laws where the projects they bid and work on are located.
As it applies to subcontractors, retainage is the practice of regularly holding a portion of progress payments that subcontractors earn for performing construction services.
“In most states, retainage is a typical practice in both public and private construction contracts,” the manual explains. “The mandatory or permissive nature of retainage varies from state to state. In a few states, the retained funds may be held in escrow, to be paid back to the contractor or subcontractor with interest. Some states also permit contractors and subcontractors to substitute securities in lieu of retainage. Other states require contracting agencies or owners to reduce the rate or even eliminate retainage once a certain portion of the contract is complete.”
Each state entry in the manual reviews critical factors in retainage law for private and public work, including the retainage rate permitted under law, retainage release milestones, and any options to provide alternative securities in lieu of retainage.
As it applies to subcontractors, retainage is the practice of regularly holding a portion of progress payments that subcontractors earn for performing construction services.
“In most states, retainage is a typical practice in both public and private construction contracts,” the manual explains. “The mandatory or permissive nature of retainage varies from state to state. In a few states, the retained funds may be held in escrow, to be paid back to the contractor or subcontractor with interest. Some states also permit contractors and subcontractors to substitute securities in lieu of retainage. Other states require contracting agencies or owners to reduce the rate or even eliminate retainage once a certain portion of the contract is complete.”
Each state entry in the manual reviews critical factors in retainage law for private and public work, including the retainage rate permitted under law, retainage release milestones, and any options to provide alternative securities in lieu of retainage.
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