Texas retainage

Who and what this applies to

Governmental public-works contracts covered by Government Code Chapter 2252, Subchapter B.

Thresholds and scope

Subchapter B excludes contracts estimated below $400,000, pre-August 31, 1981 contracts, and TxDOT contracts under Transportation Code Chapter 223.

The rules

• Section 2252.032(b): for covered contracts below $5 million, retainage cannot exceed 10% of the contract price or any schedule item; at $5 million or more the limits are 5%. Dam construction or maintenance uses 10% regardless of value. Source
• Section 2252.032(i) exempts specified previously approved Water Development Board financing and specified large wholesale water suppliers from subsection (b); those entities must place retainage exceeding 5% of periodic payments in an interest-bearing account. Source
• Section 2252.032(d): a prime contractor cannot withhold a greater retainage percentage from a subcontractor than the government may withhold under the prime contract; the same ceiling passes to lower tiers. Source
• Sections 2252.032(e)-(f): retainage generally cannot continue after the contracted work is completed, including merely through a warranty period. On final application, a bona fide dispute about contract compliance or a surety refusal can justify withholding with written notice of the basis. Source

Deadlines

Completion and release conditions must be specified in the public contract; the statutory dispute and surety exceptions remain applicable.

Primary sources

• GV.2252.htm

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

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