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If you are terminated from a contract, does the owner still owe the retainage that was withheld?

TexasRetainage

We were terminated from a contract job that over 70K in retainage has been withheld. We do not agree with the reasons, but do they still owe us the retainage?

1 reply

Sep 18, 2018
That's a great question. While the Texas Property Code does not provide a particularly explicit answer here, looking at the nature of retainage should help provide some clarity. Retainage represents amounts that have already been earned, but are being withheld as security for the furtherance of the project. The amounts withheld as retainage, if necessary, are used to remediate problems with the project. However, under the Texas Property Code, once a project has been completed, those retainage sums must be paid to the original contractor within 30 days. The Texas Property Code does not state that retainage sums must be paid within 30 days of the original contractor being terminated, but it's not like the property owner can withhold retainage indefinitely if there are no grounds for withholding it. Practically speaking, it's worth noting that a claim for retainage may be made against the property owner - so if they're refusing to release retainage, threatening to file a claim on retainage could be helpful to prompt the release of those funds. If that's ineffective, actually filing a claim for the retained amount could be helpful as well.
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