New Jersey retainage

Who and what this applies to

Local Public Contracts Law improvement contracts exceeding $100,000 where the contractor agrees to withholding.

Thresholds and scope

Covered partial-payment withholding is 2%.

The rules

• Covered local improvement contracts over $100,000 provide at least monthly partial payments, subject to the statutory deposit-bond alternative. Source
• For covered contracts with agreed withholding, the contracting unit retains 2% of each partial payment pending completion. Source
• After completed work is accepted, all retention must be paid within 45 days of the agreed final acceptance date. Any required post-acceptance maintenance security must be a maintenance bond, limited to two years and 100% of project costs. Source

Primary sources

• N.J.S.A. 40A:11-16.2
• N.J.S.A. 40A:11-16.3(a)
• N.J.S.A. 40A:11-16.3(b)

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

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