is it legal in Texas to with hold retainage on a labor only subcontract, ie, the owner withholds retainage on all funds paid to Contractor and therefore GC also withholds retainage on all subcontractor work
1 reply
Mar 24, 2020
In Texas, retainage can be withheld from subcontractors. And, from what I can tell, in the Texas Property Code doesn't seem to limit the ability to withhold retainage from a subcontractor on the basis that they only provide labore. So, if the subcontract states that retainage will be withheld, or if the amount to be paid is reliant on what the contractor will be paid, then retainage can be withheld from their payment.
Though, if withholding retainage would mean paying outside of the terms of the contract, then withholding retainage would likely be out of line.
For more information on the Texas retainage laws: Texas Retainage Guide and FAQs.