Michigan retainage

Who and what this applies to

Covered written public-agency construction contracts under 1980 PA 524: at least $30,000 and more than three payments. The public-agency definition excludes MDOT, school districts, junior/community colleges, MSHDA and municipal electric utilities/agencies.

Thresholds and scope

Maximum 10% through 50% work-in-place; continued withholding requires the statutory performance grounds.

The rules

• Coverage and excluded agencies are specified in section 1561. Source
• An agency may retain up to 10% of work-in-place through 50% completion. Thereafter it may retain up to 10% of further work only for unsatisfactory progress or another specific performance-related cause. Source
• Retainage and interest generally release with final progress payment, subject to section 4(7)-(8). After 94% work-in-place, the original contractor may obtain release by furnishing the prescribed acceptable irrevocable letter of credit. Source

Primary sources

• MCL 125.1561(c), (h)
• MCL 125.1563(2)
• MCL 125.1563(4)-(5)

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

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