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what is the law regarding general contractors withholding 10 % retainage?

OklahomaRetainage

i am a subcontractor who is constantly faced with issues getting retainage released. I thought after job reached a certain percentage of completion that retainage would also be reduced?

1 reply

Mar 6, 2019
Retainage can definitely be frustrating to deal with, especially since it can choke off cash-flow necessary to take on other work. Hopefully, the infromation provided below can give you a better picture of how retainage is allowed to function in Oklahoma.

In Oklahoma, retainage for public projects is partially governed by statute. Title 61 of Oklahoma statutes governs public works in that state, and contains certain provisions and restrictions with respect to retainage.

While 10% used to be the maximum retainage allowed (and, accordingly, the norm) §61-113.1 and §61-226 currently set the maximum retainage at 5%. Additionally, Oklahoma does not allow for retainage to be withheld on Department of Transportation or Oklahoma Turnpike Authority projects.

The statute also provides guidelines for the time in which retainage must be released, stating that:

No later than twenty-one (21) calendar days after a certificate of substantial completion is issued for the project or separate usable phase of the project . . . retainage shall be released by the owner to the prime contractor."

An amount not exceeding 150% of the estimated costs to correct any incomplete or defective work identified in an itemized list attached to the certificate of substantial completion may still be retained, until each specific deficiency is addressed.

The prime contractor shall release the retainage withheld from other entities, within ten (10) calendar days of receipt of payment from the public entities. And, all other entities shall release within seven (7) calendar days of receipt, the share of those funds that have been withheld from parties below them on the payment chain.

Oklahoma law is silent on retainage with respect to private works of improvement, so the contract between the parties likely applies. However, on projects other than residential projects of 4 units or fewer Oklahoma's prompt payment requirements apply which mandate payment to subs from the GC within 10 days after the prime contractor receives payment (which, unless otherwise agreed must be within 28 days of billing to the owner).
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