I am a small contractor who worked on a large project. I have not been paid for over 60 days. I have already completed all my work on the job. Why are they still holding my final payment until all trades are complete? What can I do?
1 reply
May 13, 2020
It's extremely common for a customer to want to withhold payment until all trades have finished their work. Obviously, that doesn't necessarily make it legal.
It looks like you were a general contractor on this job based on the information you provided above - so most of this information is written with the understanding that you were hired directly by the owner. I'll sprinkle in information relevant for subcontractors as well, though.
Illinois retainage laws
815 ILCS 603/20 sets limitations on how retainage can be withheld and when it must be paid on privately-owned construction projects. So, first, it's probably worth making sure retainage has been properly managed.
Under that section, retainage can't exceed 10% up to the halfway point of the project. At that point, the retainage being withheld must be reduced to 5% (meaning, some retainage must be paid out). And, from that halfway point on, no more than 5% can be retained from ongoing payments.
Finally, in the event that you were hired by someone other than the property owner, keep in mind that your customer must release payment to you within 15 days of when the customer receives their retainage payment.
Prompt payment in Illinois
Regarding final payment - if a contractor has performed their work in accordance with the contract, the contractor should be paid what they're owed. Once a pay application is submitted for final payment, the owner must either approve or deny that application for payment. If the owner rejects the pay application, they have to do so in writing - and without written rejection, the pay app is considered "approved" within 25 days.
Even if the owner does reject the pay app - they can only withhold payment for amounts that reasonably relate to the value of the work that wasn't done in accordance with the contract. And, the customer can't unilaterally and arbitrarily decide when final retainage payments will be released.