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When are an owner and general contractor required to provide payment?

TennesseePrompt PaymentRetainage

I am seeking solid terminology on when a retainage payment must be paid out. I have seen contradicting language and just looking for clarification. I have seen language stating "substantial completion of the project" and I have also seen language more specific to the specific work a subcontractor has completed. I am just looking to find which is correct and if we get paid once the overall job has substantial completion and or they receive the use and occupy permit or if once we complete our scope of work, we get paid.

1 reply

May 27, 2022

Pursuant to TCA §66-34-204 provides:
 

When an owner:

(1) Has received a use and/or occupancy permit for an improvement from a governmental agency lawfully issuing such permit;

(2) Has received a certificate of substantial completion from an architect or engineer charged with supervision of the construction of an improvement; or

(3) Begins to use or could have begun to use an improvement;
 

the owner shall, after any such event and pursuant to the terms of the written contract, pay to the prime contractor all retainage the owner may have withheld pursuant to the written contract, except any sum which the owner may reasonably withhold in accordance with the written contract between the owner and the prime contractor; the retainage must be paid within ninety (90) days after the date of the occurrence of an event included in subdivision (1), (2) or (3).

This is pretty straightforward. The one area that could be abused is “ except any sum which the owner may reasonably withhold in accordance with the written contract between the owner and the prime contractor”. The intent for behind this statement is to permit an amount allowed to withhold to cover incomplete work inclusive of punch list items.

If you have any questions, please feel free to contact me.

Regards,.

Beau Hammet

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