Retainage
Retainage is the percentage of each progress payment an owner (or a general contractor) withholds until the work is complete, as security that the work will be finished and corrected. Many states cap how much can be withheld and when it must be released.
How retainage works
- A typical retainage is 5% or 10% of each payment, withheld until substantial completion.
- Many states set a statutory cap on retainage — for example, capping private or public retainage at a fixed percentage.
- Many states also set a release deadline: retainage must be paid within a set number of days after completion, or after acceptance.
- On federal projects, retainage is governed by the Federal Acquisition Regulation (FAR 32.103 and the contract's payment clause).
Public vs. private
Retainage rules frequently differ between public and private work within the same state, so a single "state" number is rarely the whole story. GC Laws states the project type and role a rule applies to, and links the actual statute.
Do not guess. Withholding too much retainage can itself violate a state
prompt-payment or retainage statute. Confirm the cap and release rule for the specific
project type in the state where the work is performed.
Related tools and support
Visit GC Experts for contractor business support. FedTrakker currently leads to the GC Experts site. For project-specific legal advice, find counsel.