Home>Payment Q&As>In Texas is it lawful for a gc to keep a subs retainage for one project under an assumption of a mistake on another ?

In Texas is it lawful for a gc to keep a subs retainage for one project under an assumption of a mistake on another ?

TexasRetainage
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Anonymous contractor
Aug 28, 2020

Can a project owner (or another project participant – like the GC) use funds retained as compensation on one project for unsubstantiated workmanship issues or deficiencies on a different more than 1 year prior project with no retainage and no notifications?

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Anonymous contractor
Aug 28, 2020

Retainage is absolutely project specific, and the duty to keep retainage is the owner's. An owner's use of retained funds on another project is probably not strictly legal, but as a practical matter it comes down to whether the owner denies payment of retainage to the GC or any other party due to its use on another project. Separately, if retainage is released to the GC and the GC then spends the retainage on another project, that is a much bigger deal, as it is a violation of the Texas Constrcution Trust Fund Act, (which is found in Tex. Property Code Chapter 162 in case you would like to read up on it).

Either way, use of retainage on another project is not a legititmate or legal action on either the owner's part or the GC's part. However, the consequences are more severe for an offending GC. 

Make sure to send all of your requesite notices, including retainage notices, timely to preserve your retainage claim. And if it remains unpaid, feel free to contact my office to discuss the issue in greater detail.

Very best,

Ben House

281-762-1377

ben@houseperron.com

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