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Home>Levelset Community>Legal Help>If we send a TEXAS Notice of Contractual Retainage for 5%, as that is what the agreed upon retainage is, will it affect the other amounts that are due from previous payments that were short paid?

If we send a TEXAS Notice of Contractual Retainage for 5%, as that is what the agreed upon retainage is, will it affect the other amounts that are due from previous payments that were short paid?

TexasMonthly Notice

We have a contract in place with a Contractor and our role is Material Supplier. The payment terms offered to them were 95% upon manufacture completion (ready to ship) and 5% upon start-up. They have only paid 90% and we have been having a hard time getting the other 5% from the first payment. Now we are at a point where start-up has been completed and is due (however, they have Net 60 days from start-up to pay that 5% - making it due on 10/28/18). We just prepared an order for the Notice of Contractual Retainage to be sent out and listed the retainage as 5% and the amount as $13,629.00. Total balance due to us is 10% and the amount is $27,258.00. By doing this, are we hurting our rights to the other 5% that is past due?

1 reply

Sep 28, 2018
That's a fair question, especially considering Texas is home to some interesting (read: confusing) notice requirements. A Notice of Contractual Retainage is not a snapshot of all amounts due and owing at the time it is sent - rather, it informs recipients that retainage is being withheld from the sender. When amounts other than retainage are owed but unpaid, treating those amounts like any other debt (and potentially sending monthly notices) would likely be appropriate. By sending monthly notices as required by statute, a claimant can preserve the right to lien those amounts that have gone unpaid that do not reflect retainage. Plus, the mere receipt of monthly notices typically works to keep the job on track. You can learn more about Texas monthly notices here: Texas Lien and Notice FAQs and hereWhat is a Monthly Fund Trapping Notice?
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