Maryland retainage

Who and what this applies to

Separate rules apply to covered State construction procurement and the contracts governed by Real Property section 9-304.

Thresholds and scope

Section 9-304 excludes contracts below $100,000 and DHCD-funded projects; section 9-305 adds residential exclusions.

The rules

• On covered State construction procurement with 100% payment and performance security, contractual retainage is capped at 5%. Downstream percentages cannot exceed the upstream percentage; additional reasonable protective withholding remains possible. Source
• Under section 9-304, the 5% contract/payment cap applies when 100% performance and payment security is furnished. Downstream retention percentages cannot exceed upstream percentages; reasonable performance-related additional withholding is permitted. Source
• Undisputed owner retention under section 9-304 is payable within 90 days of substantial completion as the contract/subcontract defines it. Source
• The Real Property subtitle excludes single-family construction-and-sale contracts, Custom Home Protection Act transactions and licensed MHIC home-improvement contracts. Source

Primary sources

• Md. State Finance and Procurement §13-225
• Md. Real Property §9-304(b)-(d)
• Md. Real Property §9-304(e)
• Md. Real Property §9-305

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

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