When is construction retainage released in the US?
Retainage is generally released at substantial or final completion, after punch-list work is finished and lien waivers are delivered. Many states also require retainage to be reduced (for example from 10% to 5%) once the project reaches 50% completion, releasing part of the held funds earlier.
Do states limit how much retainage can be withheld?
Yes. Many state statutes cap retainage — commonly at 5% or 10% — and require reduction at a set completion milestone. Public-works statutes often impose stricter limits and mandatory release timelines than private contracts.
What happens if retainage is released late?
When retainage becomes due and the payer withholds it past the statutory deadline without a valid dispute, prompt-payment interest typically begins to accrue, and the unpaid party may pursue a lien or bond claim for the withheld amount.
Can subcontractors recover withheld retainage?
Yes. Retainage is earned money, so a subcontractor can pursue it through the prompt-payment statute, a mechanic's lien, or a Miller Act / bond claim on public or federal projects if it is not released when due, subject to lien and claim deadlines.