Arizona Retainage Requirements
- Private Jobs
- Public Jobs
- Top Links
a "reasonable amount of retention"
7 Day Pay Period
Owner must release retention to the contractor within 7 days after the date the billing or estimate for release of retention is certified and approved, unless otherwise specified in the contract.
There is a Process to Recover
Subs may request notice of release of retention from property owner, and contractors must estimate release of retention upon substantial completion of the work.
Not Held In Escrow
In Arizona, contractors and owners do not need to hold retainage funds in a separate escrow account.
The retainage rate is set at 10% of each pay estimate. Once 50% of work is completed, retainage is limited to 5% if work is satisfactory.
60 Day Pay Period
Upon completion or acceptance of each separate building, public work, or other division of the contract, retainage must be released. Funds must be released to the contractor within 60 days of completion or filing a Notice of Completion.
There's No Process to Recover
Retainage serves two general purposes: (1) To provide an incentive to the contractor or subcontractor to complete the project; and (2) To give the owner some protection against problems like liens, contractual defaults, delays, and more. In most states, laws exist to regulate how the parties use the retainage concept, mostly protecting some parties against abuse of the tool from others. The following are resources, legal information, and frequently asked questions about Arizona’s retainage requirements. The Arizona retainage statutes are reproduced below on this page.