Understanding Retainage Laws in Florida Construction Projects
Retainage laws directly affect how and when you get paid on construction jobs. If you’re a contractor or subcontractor in Florida, knowing these rules helps you protect your cash flow and avoid unnecessary payment disputes.
What Is Retainage in Construction?
Retainage refers to the portion of your payment that’s withheld until certain project milestones are met, typically final completion or resolution of punch list items. Most Florida construction contracts withhold between 5% and 10% of the contract value, though the specific amount depends on the contract. This amount isn’t necessarily held in a separate escrow account unless agreed in writing.
How Florida Law Regulates Retainage
For public projects, Florida law (§ 255.077) requires retainage to be reduced to 5% after 50% of the project is completed, as long as the contractor is performing satisfactorily. Full retainage must be released upon final acceptance of the work, and payment must follow within 30 days.
For private projects, there is no statutory cap on retainage. However, § 713.06(3)(c) of the Florida Statutes requires owners to pay all undisputed amounts within a reasonable time, including retainage.
Why Retainage Affects Your Cash Flow
Retainage reduces your access to working capital during the job. If release is delayed, it can strain your ability to pay subs, suppliers, and labor. Clear tracking of withheld funds and the terms for release is essential to avoiding disputes and staying solvent.
How to Protect Your Right to Payment
Use contracts that spell out retainage terms in detail, including when and how funds are released. Keep detailed records of your progress, inspections, and compliance with project milestones. If retainage is not released as required, Florida law may allow you to pursue legal remedies, including interest on delayed payments.
Looking Ahead
Retainage isn’t going away, but you can manage its impact. With smart contract language, clear documentation, and knowledge of your legal rights, you can maintain financial stability while meeting your project obligations.