interest on a retainage fee

4 weeks ago

I am a small contractor who did excavation work for a large company. I had a retainage fee withheld for my work which was to be paid October 1 of 2019. I finally received payment on May 4, 2020. The company took off all my interest charges for the late payments. They told me because it is a retainage fee I can not charge the interest. Can I charge interest and are they required to pay it. The work took place in South Dakota.

Additional info about this contractor
Project Role: Subcontractor
Senior Legal Associate Levelset
355 reviews

South Dakota doesn’t seem to have prompt payment or retainage laws in place that regulate payment speed or interest penalties on private construction projects. That means everything will come down to what’s been agreed upon in the contract, in all likelihood.

If the contract put a timeframe on when retainage had to be paid, and if retainage was paid late – then interest penalties may be in order. And, if the contract set a specific interest rate on late payments – then that’d dictate what’s owed.

But, unless specific retainage timeframes were designated, and unless the contract contemplated interest penalties, it will be hard to force a customer to pay interest on late retainage payments.

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
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