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

Montana Retainage for Private Projects FAQs

Montana Retainage FAQs

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

Retainage is limited to no more than 5%. Contractors may no withhold a higher percentage from subcontractors than the owner is withholding from the original contractor.

How long can a party withhold retainage in Montana?

Retainage is to be released upon completion and final acceptance of each divisible portion of the work for which the contract provides a separate price. This is inapplicable to residential projects of less than $400,000.

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

This is not specified by the Montana retainage statute.

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

The contractor shall submit payment requests to the owner pursuant to the terms of the contract.  Recovery may be specified otherwise in the contract.

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

A notice requirement is not specified in the Montana retainage statute.

Montana Retainage for Public Projects FAQ

Montana Retainage FAQs

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

Retainage is limited to no more than 5% if contractor performing the contract by its terms. Contractor may not withhold a higher percentage from subcontractors than the owner is withholding from the original contractor.

How long can a party withhold retainage in Montana?

The government entity must make final payment of the contract price within 30 days after final acceptance.

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

This is not specified in the Montana retainage statute.

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

Contractor must request final acceptance.

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

See above.

Montana Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Montana’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. Montana’s specific laws can be found in: Mont. Code Ann. § 28-2-2107 and § 18-2-316, and are reproduced below.

Retainage Statute on Private Projects

§ 28-2-2107: Exception for Certain Residential Dwellings

The provisions of this part do not apply to residential projects or improvements to real property intended for residential purposes with a total cost of less than $ 400,000.

Retainage Statute on Public Projects

§ 18-2-316: Limit on Retainage for Public Contracts

(1) The maximum retainage applied to construction contracts administered by the state of Montana or any department, agency, or political subdivision of the state of Montana, by any county, municipality, or political subdivision of a county or municipality, or by a school district may not exceed 5% if the contractor is performing by the terms of the contract.

(2) The retainage percentage withheld by a government entity, as provided for in subsection (1), from a contractor is the maximum retainage percentage that a contractor may withhold from a subcontractor.

(3) For the purposes for this section, “retainage” means the ratio, in percent, of funds retained to the total amount to be paid to the contractor by the government entity.