Business

Changes made to law governing retainage

Gov. Mark Parkinson on Monday signed into law changes to the rules governing retainage, the money kept by owners from contractors and subcontractors until work is complete.

* An owner or contractor cannot withhold more than 5 percent of the value of a contract as retainage, unless a higher rate is necessary to ensure performance. The bill caps retainage at 10 percent.

* An owner or contractor must release all remaining retainage on any undisputed payment within 30 days after substantial completion of a project.

* An owner or contractor may withhold no more than 150 percent of the value of incomplete work.

* A contractor or subcontractor may request an alternate security, such as an irrevocable bank letter of credit, certificate of deposit, cash bond, or other asset equal to or exceeding the amount of the retained funds.

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