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50% retention in GA


60 days ago, we drew for 50% retention on a project that was closer to 80% done. They paid the material and labor draw but refused the retention draw saying they'd pay it all at the end. The contract is now 100% complete with no complaints. Our contract does state they have 60 days for final retention. Do we not have the right to 50% upon 50% completion. Do they have the right to hold it?

1 reply

Sep 15, 2017
From your question it is not clear if the project was a public project or a private project, or whether you contracted directly with the property owner or some other party, so each will be discussed briefly, below.

Private Projects:

Georgia law limits the amount of retainage that can be withheld to a “reasonable amount” - and the amount must be set forth in the contract between the property owner and the direct contractor. To the extent that the retainage is held by a contractor or subcontractor rather than the owner, "the retainage withheld shall not exceed the percentage retained from the contractor by the owner on account of the subcontractor’s work." Further, the direct contractor is required to make "pass through" payments to subcontractors and reduce each subcontractor’s retainage within 10 days from any payment by the owner after the sub's work is more than 50% complete.

Public Projects:

On Georgia public projects, the maximum allowable retainage rate is 10% of each progress payment. Once a project is 50% complete, retainage must be eliminated if progress is satisfactory (if progress is unsatisfactory, retainage may be reinstated at the previous level). The same limits apply to retainage by contractor to subcontractors. After substantial completion of the project, the public entity must release the retained amount within 30 days of receipt of invoice, and the contractor (and subcontractors), must pass payment to subcontractors within 30 days of receipt of retainage.

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