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Requesting Retainage Payment Prior to Completion

Good Afternoon, We are a small subcontractor currently working with a single GC on multiple projects. They GC holds retainage from every progress bill. Due to the length of these projects, we would like to know more about the best practices regarding a partial payment request against retainage prior to project completion. Are there any legal resources that can point us in the right direction here?

1 reply

Apr 15, 2020

In Georgia, the retainage laws are pretty sparse. The law mostly leaves it up to the GC & the Subcontractor to agree on how to handle retainage on a job. Let me break down a few of the issues, and then give some insight on how you may get some relief here. Levelset has a resource center for Georgia Retainage Rules. You'll notice that so much of the law refers right back to the contract between the parties. Some states limit how much retainage can be held on a job. But not so in Georgia. The law only requires that retainage amounts be "reasonable." Further, some states dictate a process you can use to recover retainage...but again, not so in Georgia. It basically points right back to your contract. The one place where Georgia law is clear is difficult to administer. According to the statutes, a general contractor must pay you retainage within 10 days from when they receive any retainage from the owner. So, once the owner gives retainage money to the general contractor...then the GC must turn around and give it to you quickly. Of course, it can be difficult for you to know when this happens, and track it across multiple jobs. Your current situation makes total sense. You have a lot of money out on the street with this one general contractor, who is holding retainage $ from you across multiple jobs. Do you have to wait until the entire job is complete and this stuff gets paid out...or, can you get some of this money along the way? Since the law does not have any explicit help for you...here is how you want to think about it. 1. Look at your contract First, look at your contract and get clear on what you are entitled to with retainage. If there is some way or process for you to request retainage after partial completion or after some period of time, follow that process. However, if there is no wiggle room for you and/or no way for you to get retainage early, then move onto #2. 2. Ask the GC Go and talk to the general contractor. It's possible that the general contractor will work something out. The reason they hold retainage is to make sure that you complete the work and that they are protected against non-performance. If you're working across multiple jobs, it's very likely they have enough trust in you, and/or enough protection to give you some wiggle here. Maybe they will go to the owner for you to loosen up some money. Maybe they will give money directly. Etc. You never know...and it's a good idea to ask. But, if they don't move on this, then... 3. Use things to amp up the pressure -- like filing a lien You can file a lien. And you probably should. And it will help. And this is why. When you finish your work on a job in Georgia, you have 90 days to file a mechanics lien. Once those 90 days are gone...your lien right is gone, forever. Yes, even for the retainage. It is completely 1000% super reasonable (and the best practice) to file your mechanics lien within that 90 day window for any amount owed to you. Including retainage. You shouldn't let your lien rights for retainage get lost. Especially in the current economic condition. When you file the lien, it's going to pressure the GC to pay you and get that lien removed. While they have the right to withhold retainage, they also have an obligation with the owner to keep the property free and clear of liens. Filing a lien will put those two things in conflict, and the only door out for the GC will be to pay your claim. Because you have an absolute, and reasonable, right to put your lien on the books while you wait for retainage. Here is a step-by-step guide to filing a mechanics lien in Georgia. Also, I'd recommend that you search for your contractor in our GC database to see whether anyone else is having any payment issues with this GC, and/or has left a review related to how the GC handles retainage issues like this. Leave your own review to help others!

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