Alaska Retainage Overview

Retainage serves two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) To give the owner some protection against problems like liens, contractual defaults, delays, and more.  In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others. The following are resources, legal information, and frequently asked questions about Alaska’s retainage requirements. The Alaska retainage statutes are reproduced below on this page.

Alaska Retainage for Private Projects FAQs

Alaska Retainage FAQs

Does Alaska limit the amount of retainage that can be withheld from a contractor?

Not specified in the Alaska retainage statute.

How long can a party withhold retainage in Alaska?

Not specified in the Alaska retainage statute.

Does Alaska require retained funds be deposited in a special account? Can securities be substituted for retainage?

Not specified in the Alaska retainage statute.

How can I make a claim to recover retainage in Alaska?

Not specified in the Alaska retainage statute.

Is there a specific notice required to recover retainage in Alaska?

Not specified in the Alaska retainage statute.

Alaska Retainage for Public Projects FAQ

ALASKA Retainage FAQs

Does Alaska limit the amount of retainage that can be withheld from a contractor?

No, Alaska’s statutory provisions provide no limit on the amount of retainage that can be withheld. This is usually a term that is negotiated contractually.

How long can a party withhold retainage in Alaska?

Alaska’s statutory provisions concerning retainage on public projects provide that a prime contractor must pay its subcontractor all retainage due under the subcontract within 8 working days after receiving final payment from the state or political subdivision OR 90 days from the last date in which the subcontractor performed labor or furnished materials, whichever is later.

A subcontractor must its subcontractor within 8 working days after receiving its share of the state-held retainage from the prime contractor or another subcontractor.

Does Alaska require retained funds be deposited in a special account? Can securities be substituted for retainage?

There is no requirement as to how retained funds should be treated nor is there a provision allowing for the substitute of retainage. This should be stipulated in your contract.

How can I make a claim to recover retainage in Alaska?

This process should be outlined in your contract in detail. If your contract does not highlight such a process, the best route would be to send a sufficient notice to the party withholding retainage and follow up from there. Alaskan Law does not provide a specific way for claiming recovery of retainage.  

Is there a specific notice required to recover retainage in Alaska?

No specific notice is required to recover retainage in Alaska. This may be outlined in your contract.

Alaska Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Alaska’s retainage laws, the rules and regulations related to the amount and timing of allowable retained payments, is important to know your rights and responsibilities as a party on a construction project. Alaska’s specific laws can be found in: AS § 36.90.250 and § 45.45.010, and are reproduced below.

Retainage Statute on Private Projects

N/A

Alaska does not have a statute outlining retainage for private projects.

Retainage Statute on Public Projects

§ 36.90.210. Required contractual terms

(a) The prime contractor and a subcontractor on a public construction or public works contract must include in a subcontract between the prime contractor and subcontractor for the public construction or public works a clause that requires the prime contractor to pay
(1) the subcontractor for satisfactory performance under the subcontract within eight working days after receiving payment from which the subcontractor is to be paid;
(2) the subcontractor all retainage due under the subcontract within eight working days after final payment is received from the state or political subdivision or after the notice period under AS 36.25.020(b) expires, whichever is later;
(3) the subcontractor interest on an amount that is not paid in accordance with (1) of this subsection for the period beginning on the day after the required payment date and ending on the day on which payment of the amount due is made; the interest shall be computed at an interest rate that is equal to the amount set out in AS 45.45.010(a);
(4) interest on retainage withheld from the subcontractor at an interest rate that is equal to the amount set out in AS 45.45.010(a).
(b) A subcontractor on a public construction or public works contract must include in each subcontract under which a person agrees to provide the subcontractor with services, other than as an employee, or supplies to be used in the public construction or public works project a clause that requires the subcontractor to pay
(1) the person for satisfactory performance under the subcontract within eight working days after receiving payment from which the person is to be paid;
(2) the person all retainage due under the subcontract with the person within eight working days after the subcontractor receives its share of the state-held retainage from the prime contractor or another subcontractor;
(3) the person interest on an amount that is not paid in accordance with (1) of this subsection for the period beginning on the day after the required payment date and ending on the day on which payment of the amount due is made; the interest shall be computed at an interest rate that is equal to the amount set out in AS 45.45.010(a);
(4) interest on retainage withheld from the person at an interest rate that is equal to the amount set out in AS 45.45.010(a).

§ 36.90.250. Retainage

(a) The state or a political subdivision of the state shall pay to the prime contractor interest on retainage, including warranty retainage, on a contract for public construction or public works at an interest rate that is equal to the amount set out in AS 45.45.010(a). Interest on retainage accrues from the date of approval of a pay request until the date of payment to the contractor.
(b) A political subdivision that has a population of 500 or less is exempt from the payment of interest under (a) of this section.

§ 45.45.010. Legal rate of interest; prepayment of interest

(a) The rate of interest in the state is 10.5 percent a year and no more on money after it is due except as provided in (b) of this section.
(b) Interest may not be charged by express agreement of the parties in a contract or loan commitment that is more than the greater of 10 percent or five percentage points above the annual rate charged member banks for advances by the 12th Federal Reserve District on the day on which the contract or loan commitment is made. A contract or loan commitment in which the principal amount exceeds $25,000 is exempt from the limitation of this subsection.
(c) to (e) Repealed.
(f) A bank, credit union, savings and loan institution, pension fund, insurance company, or mortgage company may not require or accept any percent of ownership or profits above its interest rate. This subsection does not apply to a loan if the principal amount of the loan is $1,000,000 or more and the term of the loan is five years or more, or to a negatively amortizing loan secured by owner-occupied real property originated under a program approved or sponsored by
(1) the federal government, including congressionally chartered national corporations; or
(2) the state if
(A) the real property that secures the loan is not subject to forced sale provided the owner has not violated the terms of the loan agreement including terms regarding
(i) payment of property taxes;
(ii) payment of hazard or fire insurance premiums;
(iii) keeping the property in reasonable repair;
(iv) not vacating the property for a period longer than 12 months;
(B) the owner may not be evicted from the real property that secures the loan unless a term of the loan agreement regarding a matter listed in (A)(i)–(iv) of this paragraph has been violated;
(C) neither the estate nor any heir of the former owner may be compelled to pay a deficiency judgment related to the loan; and
(D) the estate or an heir of the former owner has a right of first refusal and may either pay off the loan balance in full, if the former owner had equity in the property, or pay a sum not to exceed 95 percent of the value of the property at the time of exercise of the right of first refusal as determined by an independent real estate appraiser licensed under AS 08.87.
(g) Loan contracts and commitments covering one- to four-family dwellings may be prepaid without penalty, except federally insured loans that require a prepayment penalty.
(h) If the limitations on interest rates provided for in this section are inconsistent with the provisions of any other statute covering maximum interest, service charges, or discount rates, then the provisions of the other statute prevail.