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

Virginia Retainage for Private Projects FAQs

Virginia Retainage FAQs

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

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

How long can a party withhold retainage in Virginia?

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

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

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

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

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

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

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

Virginia Retainage for Public Projects FAQ

Virginia Retainage FAQs

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

Retainage from all parties is limited to a maximum of 5%.

How long can a party withhold retainage in Virginia?

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

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

Any public contract of $200,000 or more shall provide for an option for the contractor to use an escrow account procedure. Must execute an escrow agreement form in order to do this.

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

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

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

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

Virginia Retainage Statutes

Getting informed about prompt payment laws is important. An examination of Virginia’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. Virginia’s specific laws can be found in: VA. Code Ann. § 2.2-4333; and are reproduced below.

Retainage Statute on Private Projects

N/A

Virginia does not provide a specific retainage statute for private projects.

Retainage Statute on Public Projects

§ 2.2-4333: Retainage on Construction Contracts

A. In any public contract for construction that provides for progress payments in installments based upon an estimated percentage of completion, the contractor shall be paid at least ninety-five percent of the earned sum when payment is due, with no more than five percent being retained to ensure faithful performance of the contract. All amounts withheld may be included in the final payment.

B. Any subcontract for a public project that provides for similar progress payments shall be subject to the provisions of this section.