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

Vermont Retainage for Private Projects FAQs

Vermont Retainage FAQs

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

There is no statutory limit on the amount of retainage one can withheld. Retainage may be withheld from subcontractors even if no retainage was withheld from the party withholding retainage.

How long can a party withhold retainage in Vermont?

Any retained amount must be released to the contractor within 30 days of acceptance of the work. Unless otherwise contractually agreed upon, a contractor shall pay its subcontractors, and subcontractor shall pay its subcontractors, within 7 days after receipt of retainage, the full amount due to each subcontractor.

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

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

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

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

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

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

Vermont Retainage for Public Projects FAQ

Vermont Retainage FAQs

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

There is no statutory limit for retainage on public projects imposed by the Vermont retainage statute.

How long can a party withhold retainage in Vermont?

Any retained amount must be released to contractor within 30 days of acceptance of the work. Retainage may be withheld from subcontractors even if no retainage was withheld from the party withholding retainage. A subcontractor shall be paid within 7 days of receipt of retainage by contractor/subcontractor.

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

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

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

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

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

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

Vermont Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Vermont’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. Vermont’s specific laws can be found in: VT. Stat. Ann. tit. 9, § 4005; and is reproduced below.

Retainage Statute on Private Projects

tit. 9, § 4005: Retainage

(a) If payments under a construction contract are subject to retainage, any amounts which have been retained during the performance of the contract and which are due to be released to the contractor upon final completion shall be paid within 30 days after final acceptance of the work.

(b) If an owner is not withholding retainage, a contractor may withhold retainage from its subcontractor in accordance with their agreement. The retainage shall be paid within 30 days after final acceptance of the work.

(c) Notwithstanding any contrary agreement, a contractor shall pay to its subcontractors, and each subcontractor shall in turn pay to its subcontractors, within seven days after receipt of the retainage, the full amount due to each such subcontractor.

(d) If an owner, contractor, or subcontractor unreasonably withholds acceptance of the work or fails to pay retainage as required by this section, the owner, contractor or subcontractor shall be subject to the interest, penalty, and attorney’s fees provisions of sections 4002, 4003, and 4007 of this title.

Retainage Statute on Public Projects

tit. 9, § 4005: Retainage

(a) If payments under a construction contract are subject to retainage, any amounts which have been retained during the performance of the contract and which are due to be released to the contractor upon final completion shall be paid within 30 days after final acceptance of the work.

(b) If an owner is not withholding retainage, a contractor may withhold retainage from its subcontractor in accordance with their agreement. The retainage shall be paid within 30 days after final acceptance of the work.

(c) Notwithstanding any contrary agreement, a contractor shall pay to its subcontractors, and each subcontractor shall in turn pay to its subcontractors, within seven days after receipt of the retainage, the full amount due to each such subcontractor.

(d) If an owner, contractor, or subcontractor unreasonably withholds acceptance of the work or fails to pay retainage as required by this section, the owner, contractor or subcontractor shall be subject to the interest, penalty, and attorney’s fees provisions of sections 4002, 4003, and 4007 of this title.