Mississippi 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 Mississippi’s retainage requirements. The Mississippi retainage statutes are reproduced below on this page.

Mississippi Retainage for Private Projects FAQs

Mississippi Retainage FAQs

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

Mississippi state law does not provide a specific retainage statute for private projects.

How long can a party withhold retainage in Mississippi?

Mississippi state law does not provide a specific retainage statute for private projects.

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

Mississippi state law does not provide a specific retainage statute for private projects.

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

Mississippi state law does not provide a specific retainage statute for private projects.

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

Mississippi state law does not provide a specific retainage statute for private projects.

Mississippi Retainage for Public Projects FAQ

Mississippi Retainage FAQs

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

For projects other than MS Transportation Commission, retainage is limited to no more than 5%.  For contracts over $250,000, retainage is 5% until 50% completion of the project. Then, the rate is reduced to 2.5% (if work is satisfactory) and half of the withheld funds must be returned to the contractor to be disbursed. The contractor may not withhold more from a subcontractor than the state withholds form the contractor.

For county contracts of more than $1,000, the county board of supervisors must retain between 2.5% and 10%. For contracts of more than $750,000, (excepting bridge or public road contracts), 10% shall be retained until 50% completion. Then, 50% of the retainage must be returned to the contractor, and 5% retainage shall be withheld from that point forward.

How long can a party withhold retainage in Mississippi?

Contractor must be paid within 45 days of completion or substantial completion, when owner beneficially uses or occupies the project, certification by the architect or engineer, or certification as completed by contracting authority representing the State, whichever event occurs first.

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

The contractor may substitute securities in lieu of retention.

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

Final payment due to contractor will not be made until the consent of the contractor’s surety has been obtained in writing and delivered to the proper contracting authority.

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

See above.

Mississippi Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Mississippi 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. Mississippi’s specific laws can be found in: Miss. Code Ann. § 31-5-33(1), § 31-5-15, § 19-13-15(1) and § 19-13-15(3), and are reproduced below.

Retainage Statute on Private Projects

N/A

Mississippi state law does not provide a specific retainage statute for private projects.

Retainage Statute on Public Projects

§ 31-5-33(1): Amount of Retainage which May be Withheld; Exemptions

(1) In any contract for the construction, repair, alteration or demolition of any building, structure or facility awarded by the State of Mississippi, or any agency, unit or department of the State of Mississippi, or by any political subdivision thereof, which contract provides for progress payments in installments based upon an estimated percentage of completion with a percentage of the contract proceeds to be retained by the state agency, unit or department, or by the political subdivision or contractor pending completion of the contract, such retainage shall be five percent (5%), and the amount retained by the prime contractor from each payment due the subcontractor shall not exceed the percentage withheld by the state, or any agency, unit or department of the state, or by any political subdivision thereof, from the prime contractor.

On any contract as described herein, of which the total amount is Two Hundred Fifty Thousand Dollars ($250,000.00) or greater, or on any contract with a subcontractor, regardless of amount, five percent (5%) shall be retained until the work is at least fifty percent (50%) complete, on schedule and satisfactory in the architect’s and/or engineer’s opinion, at which time fifty percent (50%) of the retainage held to date shall be returned to the prime contractor for distribution to the appropriate subcontractors and suppliers. Provided, however, that future retainage shall be withheld at the rate of two and one-half percent (21/2%).

§ 31-5-15: Withdrawal by Contractor of Amounts Retained on Public Contracts by Furnishing Different Security

Under any public contract heretofore or hereafter made or awarded by the State of Mississippi, or any agency or department of the State of Mississippi, or by any political subdivision thereof, the contractor may, with the written consent of his or its surety, from time to time, withdraw the whole or any portion of the amount retained from payments due the contractor pursuant to the terms of the contract by depositing with the State Treasurer of the State of Mississippi, or the treasurer or secretary of the political subdivision of the State of Mississippi holding funds belonging to the contractor, the following security, or any combination thereof in an amount equal to or in excess of the amount so withdrawn, said securities to be accepted at the time of deposit at market value but not in excess of par value, to wit:

(1) U. S. Treasury Bonds, U. S. Treasury Notes, U. S. Treasury Certificates of Indebtedness, or U. S. Treasury Bills, or

(2) Bonds or notes of the State of Mississippi, or

(3) Bonds of any political subdivision of the State of Mississippi, or

(4) Certificates of deposit issued by commercial banks located in the State of Mississippi, provided that such certificate is negotiable or is accompanied by a power of attorney executed by the owner of the certificate in favor of the Treasurer of the State of Mississippi or of the treasurer or the secretary of the political subdivision involved, or

(5) Certificates of deposit issued by savings and loan associations located in the State of Mississippi, the accounts of which are insured by the Federal Savings and Loan Insurance Corporation, or whose accounts are insured by a company approved by the State Board of Savings and Loan Associations, provided that such certificate is made payable with accrued interest on demand and is accompanied by a power of attorney executed by the owner of the certificate in favor of the Treasurer of the State of Mississippi or the treasurer or secretary of the political subdivision involved, and provided that any such certificate from any of the savings and loan associations referred to in this subparagraph shall not be for an amount in excess of the maximum dollar amount of coverage of the Federal Savings and Loan Insurance Corporation.

The agency or department of the state shall notify the State Treasurer of the amount of deposit required and shall also notify the State Treasurer when to release the deposit. The political subdivision of the state shall notify its treasurer or secretary of the amount of deposit required and shall also notify him when to release the deposit.

The State Treasurer, or the secretary or treasurer of the political subdivision holding said security, shall, from time to time, collect all interest or income on the security so deposited and shall, by and with the written consent of contractor’s surety, pay the same when and as collected to the contractor or contractors who deposited said obligations. If the deposit be in the form of coupon bonds, the coupons as they respectively become due shall be delivered to the contractor.

If in the event of an overpayment to a contractor the contracting authority is unable to obtain reimbursement for such overpayments from the contractor, the chief administrative officer of the contracting authority shall notify the contractor, its surety and the State Treasurer or other holder of the security, of the nature of the overpayment and of the failure to obtain reimbursement. Upon such notification, the security holder shall retain the income on the deposited security until an amount equal to the overpayment is accumulated and paid to the contracting authority.

In the event the contractor shall default in the performance of the contract or any portion thereof, the securities deposited by him in lieu of retainage and all interest and coupons and income accruing on said securities after said default may be sold by the state or any agency or department thereof, or any political subdivision, and the proceeds of said sale used as if such proceeds represented the retainage provided for under the contract.

§ 19-13-15(1): Payment for Work not to be Made Until Inspection; Partial Payments

[For contracts executed on or after July 1, 1984, the following provisions apply:]

(1) The board of supervisors shall never make a payment to any contractor for building or repairing a bridge, or for doing any work on a public road, public building or other public work, where the contract price exceeds Two Hundred Dollars ($200.00) but is less than One Thousand Dollars ($1,000.00), without first having the same inspected and accepted by a committee, and having the certificate of the committee, under oath filed and entered on the minutes of the board. Such committee shall be appointed by the board of supervisors for that purpose and shall consist of at least two (2) members of the board of other districts than the one in which the work is done. The board shall not be bound by the acceptance of the committee, and shall never pay for the work in such cases until the specifications therefor are complied with and the work completed. In all cases of public work let by the board of supervisors where the contract price exceeds One Thousand Dollars ($1,000.00), the board may contract so as to provide for making partial payments to the contractor therefor as the work progresses. In no case shall the retained amount of such partial payments be less than two and one-half percent (2 ½%) nor more than ten percent (10%) of the value of the work done and material used in the performance of the contracts, such value to be estimated by some competent person employed by the board to superintend such work, and not until the superintendent shall furnish to the board such estimate, in writing, on his oath as to the correctness of such estimate, which estimate, with the oath annexed thereto, shall be filed with and recorded in the minutes of the board; provided, however, the amount retained by the prime contractor from each payment due the subcontractor shall not exceed the percentage withheld by the board of supervisors from the prime contractors. Before such person employed by the board shall enter upon the discharge of the duty of supervising such work, and before he shall furnish any estimate as to the value of the work done, he shall enter into bond in such penalty as may be fixed by the board, with sufficient sureties, to be approved by the board, and conditioned for the faithful performance of his duties as superintendent of such work, which bond shall be filed and preserved by the board, and shall be liable to suit thereon in the name of the county, for any misfeasance or malfeasance on the part of such superintendent touching the performance of his duties. The board shall not be bound by the estimate of such superintendent, nor shall the making of any partial payments on any public work, as above provided, be construed as an acceptance of the work and materials so inspected by such superintendent. The board shall not make the final payment on any such works or building without first having the same inspected as a whole and accepted by a committee of the board, as hereinbefore provided, and until the specifications are complied with and the work completed.

§ 19-13-15(3): Payment for Work not to be Made Until Inspection; Partial Payments

[For contracts executed on or after July 1, 1984, the following provisions apply:]

(3) On any contract as described in this section, except for a contract for building or repairing a bridge or doing any work on a public road, of which the total amount is Seven Hundred Fifty Thousand Dollars ($750,000.00) or greater, ten percent (10%) shall be retained until the work is at least fifty percent (50%) complete, on schedule and satisfactory in the architect’s and/or engineer’s opinion. At such time fifty percent (50%) of that retainage shall be returned to the prime contractor for distribution to the appropriate subcontractors and suppliers who are on schedule and performing satisfactorily, in the opinion of the prime contractor. Thereafter, a five percent (5%) retainage shall be withheld.