National Roofing Legal Resource Center

Contract provision addresses retainage reduction or elimination to correlate with general contractor’s contact terms

General contractor-drafted subcontracts routinely provide the general contractor is entitled to withhold a certain percentage, commonly 10 percent, as retainage until project completion. Several states have enacted statutes, and sometimes there is a provision in the prime contract providing retainage will be reduced, perhaps to 5 percent, or no further retainage is to be withheld when the job is 50 percent complete. If and when there is a reduction in the retainage withheld from the general contractor, there should be a corresponding reduction in retainage withheld by the general contractor from subcontractors. Roofing subcontractors should consider inserting a provision in their subcontracts with general contractors so the general contractor is contractually obligated to reduce retainage as the general contractor's retainage is reduced or eliminated.

Corresponding retainage reduction or elimination for subcontractor: The retainage to be withheld from roofing contractor shall not exceed the retainage withheld by the owner from the general contractor applicable to roofing contractor's work. If general contractor's retainage is reduced by owner at any time, roofing contractor shall be entitled to a corresponding reduction in retainage at the same time as the general contractor's retainage is reduced.


12/22/2017



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