California retainage

Who and what this applies to

Private contracts within Civil Code §8811 entered on or after January 1, 2026; owner-release timing under §8812.

Thresholds and scope

5% for the covered contracts and payment amounts.

The rules

• Section 8811 caps retention at 5% of a payment and 5% of the contract price. A downstream retention percentage cannot exceed the upstream percentage. Exceptions include the stated bid-time performance/payment-bond demand followed by failure to supply qualifying bonds, and non-mixed-use residential projects of four stories or fewer. Source
• Section 8812 requires the owner to pay retention within 45 days after completion of the work of improvement. A good-faith dispute permits withholding no more than 150% of the disputed amount. Retention allocated to a part that will become public-entity property may be conditioned on that entity’s acceptance of the part. Source

Primary sources

• Cal. Civ. Code §8811
• Cal. Civ. Code §8812

Sources reviewed 2026-09-30. This guide covers the projects and rules stated above.

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