Home>Levelset Community>Legal Help>After reading the FAQs, I'm afraid I'm as confused as ever! As a homeowner having a new roof installed, am I supposed to withhold 10% of the contract price for 30 days? My reading of the paperwork with the contractor is that I should do this in the event that a supplier is not paid. However, the Q&A on this page just muddy up the waters. Please answer in plain English and not legalise!

After reading the FAQs, I'm afraid I'm as confused as ever! As a homeowner having a new roof installed, am I supposed to withhold 10% of the contract price for 30 days? My reading of the paperwork with the contractor is that I should do this in the event that a supplier is not paid. However, the Q&A on this page just muddy up the waters. Please answer in plain English and not legalise!

TexasRetainage

We are having a new roof installed on the house. Insurance is paying part and we are paying the deductible plus the upgrades not covered by insurance. Under a section entitled "Claims by subcontractors and suppliers" in the paperwork, it indicates that if a subcontractor or supplier who furnishes labor or materials is not paid, we might become liable and the property subject to a lien for the unpaid amount. It states to avoid liability, I should 'withhold or cause your lender to withhold 10% of the amount of payments made for the work performed...' It says I should withhold 10% for at least 30 days. From what I can deduce, this is to make sure the contractor pays all bills. I am trying to make sure I understand this fully, but the Q&A on this page, written I think with the lawyer in mind, makes me more confused! Can you please clarify?

1 reply

Jul 19, 2019

Texas construction payment law is exceptionally confusing, whether the question involves notices, mechanics liens, trust fund requirements, or retainage. And, I'm sorry you've found some of the resources available on this site just as confusing. I'll try to provide some information more clearly.

Despite the mess of Texas construction payment law, there are some situations in which a relatively clear answer applies.

Regarding retainage, while the noticing rules and rules for making a claim are complex, the requirements to retain a portion of the contract price are fairly straightforward:

1. Texas's retainage rules and requirements apply to residential projects.
2. Texas's retainage rules require the property owner to retain 10% of the contract price during the project and for 30 days thereafter.

These retained amounts serve a couple purposes. First, they provide incentive for the work to be finished appropriately and sufficiently; and, second, they provide protection with respect to lien claims made by sub-tier parties.

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