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Can you file liens/bond claims against retainage if that's all that is left to be paid?

KentuckyRetainage Right to Lien

We work in the eastern half of the US. So I know laws vary by state. But are there any states that don't allow you to file Liens or bond claims on money that is considered retainage? I selected KY because that's where we are but like I said, we work in several states.

1 reply

Dec 3, 2018

That's a fair question. Taking a step back to look at retainage should help here. By definition, retainage amounts are amounts that are being withheld - despite the fact that they've already been earned. Regardless of industry practice, these amounts reflect money owed for work performed. When money has been earned for work performed (but not paid), the right to file a lien claim or a bond claim will arise. Granted, the effectiveness of such a claim could be affected by whether or not that retainage is actually due to be paid under the agreement between the parties. Meaning, if it's been agreed that retainage will be released on X date and a claimant files a lien for those retainage amounts before that date, there's always potential for such a claim to be ineffective. But, if it's proposed that retainage will be paid at a time that's beyond the lien or bond claim deadline, an agreed timeline for retainage might be irrelevant - lien and bond claim deadlines are incredibly strict, and the agreement that payment will be made beyond those deadlines will do nothing to extend the deadline itself. There are a number of different factors that will go into whether a lien or bond claim is appropriate for the debt at hand - but, in terms of whether a lien claim or bond claim could be made, the answer will very typically be "yes" because those amounts have been earned but not yet been paid. But again - before deciding to make such a claim, it's important to take all factors into consideration. If the lien or bond claim deadline is far away, and if payments are being made as set out by the agreement, filing a lien or bond claim well before such an action is necessary could ruffle feathers and even impact the ability to recover through those claims. As always, liens and bond claims should be a last resort saved for problem projects - and leveraging the right to make those claims (via Notice of Intent to Lien or Notice of Intent to Make Bond Claim) is often effective to compel payment before further action becomes necessary. But, if lien or bond claim deadlines are closing in and retainage is still due, or if other reasons exist to raise questions about whether retainage will be paid, making a lien claim or bond claim can be very effective to compel payment of owed amounts.

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