Are we able to file lien's on retainage fee? Is there a time frame if so? This can be from a variety of states.
1 reply
Apr 3, 2018
This is a good question, as retainage laws can create confusion when it comes to mechanics lien rights. The Tennessee mechanics lien statute appears to be pretty blunt in what amounts are lienable. § 66-11-102(a) of the lien statute states: "The lien shall secure the contract price." Because retainage represents some amount of the contract price, it would seem that retainage amounts are lienable. However, if retainage amounts are being properly withheld and not yet owed, a mechanics lien might not be proper. Note, though, that if a lien deadline is fast approaching, the safer move may be to file a mechanics lien against retained amounts since mechanics lien deadlines tend to be unforgiving. In Tennessee, up to 5% retainage is allowable, and that retainage must be released at different times depending on a party's role. For an original contractor, retainage must be released within 90 days of substantial completion. Regarding funds withheld by an original contractor for a subcontractor, funds must be released within 10 days of the original contractor's receipt of funds that were withheld from the original contractor. If these retainage restrictions are not followed, the party failing to release retainage may be subject to penalties - including potential misdemeanors and fines. Unfortunately, the statute does not specifically provide for how a claimant should make a claim to recover retainage. Finally, it's worth noting that the method for recovering retainage will vary state by state. Sometimes, a mechanics lien to recover retainage may be proper, but other times, a different method for recovery of retainage may be required. However, zlien has a tool to help navigate this - our website contains Retainage FAQs for every state. Here are the Tennessee Retainage FAQs, for starters.