Hi, I have a question. I work for a County government. We have hired a general contractor for a new jail construction project. Can you point me to read up the rules on retainage. This GC wants to open an escrow account for the retainage and plan to use/draw the interest when earned. Is this common practice?
Public Contract Code Section 7107. Interest is allowed for any late payment wrongfully withheld by the public agency up to 2% APR.
I second PCC 7107. There are time lines to comply with in there. And yes, escrow accounts are common ways to deal with retention.
Hi,
Here’s a link to a good overview. On public projects, the contractor is entitled to the interest if the money is in an escrow account.
https://www.levelset.com/blog/california-retainage-laws/
Good luck!