When a contractor does a proposal for new construction. Can they ask for a % prior to commencement of the project AND in addition ask for a retainage upon substantial completion of the project?
1 reply
Sep 6, 2019
A "down payment" prior to work which is set forth by the contract does not modify the rules regarding retainage. Both the payment schedule and the retainage requirements should be set forth by the contract, so the question of whether either provision has been violated would likely require an examination of the contract itself.
Washington does not statutorily regulate retainage on private projects - there is no specific limit to the amount that can be withheld, and there is no specific time limit with respect to the period for which it may be held. Both of these requirements should be set forth in the contract. For public projects in Washington, retainage is capped at 5%, and the contractor may request that the retainage be reduced throughout the life of the project. Retainage must be released within 60 days of the completion of a Washington public project. Also, remember that retainage is comprised of amounts due for work that has been completed - once the work is sufficiently done and parties down the chain paid for their work, retainage is no longer necessary.
Washington is not one of the states that limits "advance payment" requirements, so even if the job wa residential in nature, the contract itself will likely control regarding the amounts due prior to work.
If you have questions regarding the specific requirements of the contract, or interpreting what certain language in the contract means, you should talk with a local attorney who can dig in to the document itself. From a general standpoint, there is no prohibition against both requesting a down payment, and then requesting to be paid retained amounts after the work is finished.