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

Rhode Island Retainage for Private Projects FAQs

Rhode Island Retainage FAQs

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

This is not specified for private projects in the Rhode Island retainage statute.

How long can a party withhold retainage in Rhode Island?

This is not specified for private projects in the Rhode Island retainage statute.

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

This is not specified for private projects in the Rhode Island retainage statute.

How can I make a claim to recover retainage in Rhode Island?

This is not specified for private projects in the Rhode Island retainage statute.

Is there a specific notice required to recover retainage in Rhode Island?

This is not specified for private projects in the Rhode Island retainage statute.

Rhode Island Retainage for Public Projects FAQ

Rhode Island Retainage FAQs

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

Retainage is limited to 5% unless there is a dispute or another amount is agreed upon in the contract.

How long can a party withhold retainage in Rhode Island?

Withheld retainage is required to be released within 90 days of final acceptance of the work. If funds are not released on time, interest accrues at 10%/year.

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

Securities may be substituted for retainage. They must be deposited with the general treasurer.

How can I make a claim to recover retainage in Rhode Island?

This is not specified for public projects in the Rhode Island retainage statute.

Is there a specific notice required to recover retainage in Rhode Island?

This is not specified for public projects in the Rhode Island retainage statute.

Rhode Island Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Rhode Island’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. Rhode Island’s specific laws can be found in: R.I. Gen. Laws § 37-12-10; and are reproduced below.

Retainage Statute on Private Projects

N/A

Rhode Island does not provide a specific retainage statute for private projects.

Retainage Statute on Public Projects

§ 37-12-10: Retainers relating to Contracts for Public Works, Sewer, or Water Main Construction

(a) Upon substantial completion of the work required by a contract aggregating in amount less than five hundred thousand dollars ($ 500,000) with any municipality, or any agency or political subdivision thereof, for the construction, reconstruction, alteration,remodeling, repair, or improvement of sewers and water mains, or any public works project defined in § 37-13-1, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the contract price unless otherwise agreed to by the parties. Upon substantial completion of the work required by a contract aggregating in an amount of five hundred thousand dollars ($ 500,000) or greater with any municipality, or any agency or political subdivision thereof, for the construction, reconstruction, alteration, remodeling, repair, or improvement of sewers and water mains, or any public works project defined in § 37-13-1, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the contract price. In the case of periodic payments with respect to contracts less than the aggregate amount of five hundred thousand dollars ($ 500,000), the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the approved amount of any periodic payment unless otherwise agreed to by the parties. In the case of periodic payments with respect to contracts in the aggregate amount of five hundred thousand dollars ($ 500,000) or greater, the awarding authority may deduct from its payment a retention to secure satisfactory performance of the contractual work not exceeding five percent (5%) of the approved amount of any periodic payment

(b) The retainage shall be paid to any contractor or subcontractor within ninety (90) days of the date the work is accepted by the awarding authority unless a dispute exists with respect to the work. If payment is not made within ninety (90) days for any reason other than a dispute, which, if resolved and it is not the fault of the contractor, interest shall be assessed at the rate of ten percent (10%) per annum on all money which is to be paid to the contractor or subcontractor.

(c) The retainage shall be paid to any contractor or subcontractor within ninety (90) days of the date his or her work is completed and accepted by the awarding authority. If payment is not made, interest shall be assessed at the rate of ten percent (10%) per annum.

(d) There shall also be deducted and retained from the contract price an additional sum sufficient to pay the estimated cost of municipal police traffic control on any public works project. Municipalities shall directly pay the officers working traffic details and shall bill and be reimbursed by the withholding authority for which the contract is being performed every thirty (30) days until the project is complete.

(e) Notwithstanding the foregoing, with respect to projects located within the town of Warren, the withholding authority shall hold an amount from the contract price which shall be reasonably sufficient to pay the estimated cost of municipal police traffic control. The withholding authority shall pay to the town of Warren within seventy-two (72) hours of written demand the actual costs of police traffic control associated with said project on an ongoing basis.